CHAPTER – 1

INTRODUCTION

1.1 BACKGROUND OF THE STUDY:

A unit linked insurance plan can be utilized for various benefit payouts
including life insurance, retirement, education and more. A ULIP offers varying provisions to the
investor as benefits. A ULIP is typically opened by an investor seeking to provide coverage for
beneficiaries. It is paid into by the owner in the form of premiums, with the intention of the plans
worth to be paid out at a specified time frame for a specific purpose. With a life insurance ULIP,
the beneficiary would receive payments following the owners death. Plans can include varying
provisions for triggering payments.

A unit linked insurance plans investment options are structured similar to a mutual
fund. The assets in a ULIP vehicle are managed to a specified objective. The vehicle calculates a
daily net asset value. The vehicle is market linked and appreciates with increasing share value.
When an investor purchases units in a ULIP, he or she is purchasing units along with a larger
number of investor, just like an investor would purchase units in a mutual fund. Different ULIPs
offer different qualified investments. Investors can buy shares in a single strategy or diversify
their investment across multiple market-linked ULIP funds.

ULIPs require a premium. Premiums vary with the terms of each ULIP. Initial lump
sum is typically required along with annual, semi-annual or monthly premium payments.
Premium payments are proportionally invested towards specified coverage and in the designated
investments.

Unit linked insurance plan investors can make changes to their fund preferences
throughout the duration of their investment. The funds offer transferring flexibility. Numerous
investment options are also available including stock funds, bond funds and diversified funds.
Unit linked insurance plans allow for the coverage of an insurance policy with premium
payments allocated to funds that are expected to increase at market rates over time. Be sure to
read the plans prospectus before purchasing any ULIP.

ULIP came into play in the 1960s and is popular in many countries in the word. The
reason that is attributed to the wide spread popularity of ULIP is because of the transparency and
flexibility which it offers. The ULIP schemes are like BSLI fortune elite, BSLI wealth max plan,
BSLI wealth assure plan, BSLI wealth aspire plan, and BSLI wealth secure plan. ULIP is life
insurance solution that provides for the benefits of protection and flexibility in investment. The
investment is denoted as units and is represented by the value that it has attained called as net
asset value.

1.2 BACKGROUND OF THE TOPIC:

UNIT LINKED INSURANCE PLANS:

A very popular in an insurance company’s kitty is a ULIP. ULIP
plans give an individual the freedom to explore the capital market for investments while at the
same time bestowing the all too important risk coverage. At a time when the share market and
mutual funds were dominating individuals investment portfolios, ULIPs were launched by
insurance companies to lure customers with the promise of high investment returns. Today,
ULIPs have become popular among many investors as these plans provide the dual benefit of
insurance cover and wealth maximization, so, let us understand the concept of ULIPs in details.

WHAT IS ULIP:
ULIP is an insurance product which offers risk coverage to the policy buyer
along with introducing the buyer to invest in different types of investment instruments such as
stocks, bonds as well as mutual funds. ULIP can be classified as a two-in-one plan which aims at
offering investment and protection to investors, which are customized according to individual
requirements. As a comprehensive plan, the investment and protection part can be managed
according to specific buyer choices and needs.

TYPES OF ULIP:
There are various unit linked insurance plans available in the market. However, the key ones are
pension, children, group and capital guarantee plans.

The pension plans come with two variations – with and without life cover – and are meant for
people who want guarantee returns for their sunset years.

Te children plans, on the other hand, are aimed at taking acre of their educational and other
needs.

Apart from unit linked plans for individuals, group unit linked plans are also available in the
market. The group linked plans are basically designed for employers who want to offer certain
benefits for their employees such as gratuity, superannuation and leave encashment.

The other important category of ULIPs is capital guarantee plans. The plan promises the policy
holder that at least the premium paid will be returned at maturity, but the guaranteed amount is
payable only when the policy’s maturity value is below the total premium paid by the individual
till maturity. However, the guarantee is not provided on the actual premium paid but only on that
portion of the premium that is net of expenses (mortality, sales and marketing, administration).
ULIP is a contractual saving cum insurance plan that offers the following features:

 High returns
 Maturity bonus
 Life insurance cover
 Safety of capital
 Life protection
 Investment and savings
 Flexibility
 Adjustable life cover
 Investment options
 Transparency
 Options to take additional cover against
 Death due to accident
 Disability
 Critical illness
 Surgeries
 Liquidity
 Tax planning

TYPES OF INVESTMENT FUNDS UNDER ULIP PLANS:

 FIXED INTEREST AND BOND FUNDS:

These kind of funds give returns in a timely
manner. For fixed returns, insurance companies invest in debt funds, corporate
bonds, government securities, etc. the risk factor in these funds is slightly high
than cash funds. These funds are a combination of secured and unsecured
investments.
 CASH FUNDS:
Cash funds are considered to be the safest kind of investment. Cash
funds are also known as money market funds through which the policy holder
receives a set amount of returns upon maturity. These funds fall in the low-risk
category.
 EQUITY FUNDS:
These funds primarily invest in equities and stocks of companies.
Equity funds are considered the riskiest ULIP investment, but they tend to offer
the highest rewards. So if you have a high risk taking appetite, you should surely
invest in an equity fund.
  BALANCED FUNDS:
One of the most stable and prudent investments, balanced vary the
amount of investment that goes to different places. With the money paid through
premiums, insurers invest in fixed component like corporate bonds and varied
components like stock market. Balanced funds hence, fall in the medium-risk
category.

ULIP PLANS CLASSIFIED ON THE BASIS OF PURPOSE:

 ULIP FOR RETIREMENT:

This plan requires you to pay the premium during the tenure of your
employment. This amount is automatically collected as your corpus and is used
to purchase an annuity post your retirement.

 ULIP FOR WEALTH COLLECTION:

People invest in this plan in order to accumulate wealth over a
period time. This is highly recommended plan for millennials in their late
twenties and early thirties, so that they have the flexibility to fund any future
financial goal.

 ULIP FOR CHILDREN EDUCATION:

Some ULIP plans also support a child’s education. These plans
protect your child’s future in any unforeseen situation by pooling in some chunk
of money. This ensures that the key events in your child’s life never face a
financial crisis.

 ULIPs FOR HEALTH BENEFITS:

In addition to the above, certain ULIP plans also assist in
providing money in case of medical emergencies.

TYPES OF ULIP PLANS CLASSIFICATION BY DEATH BENEFIT:

There are two types of ULIP plan based on death benefit:

 TYPES 1 ULIP PLANS:

Under type-1 ULIP, the nominee gets the higher of sum assured or
fund value as a death benefit to the nominee. However, in case the assured dies
in the initial years of the policy, when the fund value is lower than the sum
 assured, the insurer will pay the agreed sum to the assured’s nominee. But when
the fund’s value is more than the sum assured, the death benefit is an
accumulated amount in the fund.

 TYPE 2 ULIP PLANS:

The nominee of the policyholder gets the sum of the both that is sum
assured and fund value in the event of demise of the policyholder. Usually, the
insurance company charges extra for the added risk it assumes under the type ll
policy, from the policyholder.

BENEFITS OF ULIP:

o FIEXIBILITY:ULIPs offer flexibility in the following ways

 It allows the investor to switch between funds and match his funding needs.
 It allows the investor to make to partial withdrawals; however, it may attract
charges and is subject to certain terms and conditions.
 It allows the investors to make single additions to their premiums and increase
their investment at any point of time, through the facility of top-ups.

o TRANSPARENT STRUCTURE:
ULIPs allow you to keep track of your investment portfolio. They also intimate
you of the percentage of premium that is invested along with the charges levied regularly.
As an investor, you are also kept informed about value and number of fund units that you
hold.

o FUNND OPTION CAN BE CHOSEN:

when choosing a unit linked insurance plan, one can decide the various fund
options, based on the risk taking appetite. In case you wish to gain higher returns and
have the capacity to take higher risks for the same, you can choose to invest in an equity
fund. Hence, if you win, you earn big. However, if you wish to take lesser risk and are
satisfied with medium to low you can choose to invest in a debt fund. ULIPs also provide
hybrid funds which suit an individual investor’s needs.

o RIDER OPTIONS FOR ADDITIONAL COVERAGE:

along with investment benefits, ULIPs also provide rider options for
additional coverage to take care of your loved ones. With rider options such as accidental
death rider, critical illness rider and term rider, you can rest assured that ULIPs not only
take care of your insurance needs but are also beneficial for your family.
 o GOOD RETURNS:
ULIPs can offer good returns depending on the fund one has invested in. if the fund
is heavily invested in capital markets, then if the stock markets do well, then the fund will
also do well.

o INSURANCE COVER:
Since ULIPs provide a mortality cover, they work as a safeguard in case the policy
holder should die unexpectedly, as the nominees can make a claim for the sum assured.

o GOOD LONG-TERM INVESTMENT:

ULIPs are an ideal investment option for those who would like to invest money
from a long-term perspective. This is because market fluctuations tend to provide lower
returns in the short run, but long-term market investments tend to yield very attractive
returns. They are ideal for those who would like to invest in a long-term goal-oriented
savings instrument, like their child’s education or marriage.

o TAX BENEFIT:
as ULIPs are life insurance products, they offer tax benefit in the form of tax free
maturity benefits and also on the death benefit and premium paid.

DISADVANTAGES OF ULIPs:

o EPENSIVE AND COMPLEX:

Since ULIPs combine insurance with investment, the premiums charged for the
life cover turn out to be far more expensive than term insurance. They are also complex
in terms of charges and not very transparent as it is not clear how much of the money
goes towards insurance, management expenses and investment. Thus, it is not viable to
make redemptions at the end of the lock in period as the fund value might be low at the
time due to higher initial charges.

o HIGHER COSTS IN INITIAL PHASE:

ULIPs cost more in the initial years because of the charges levied on the investor,
that go towards policy charges.

o MARKET FLUCTUATIONS:
Due to market fluctuations, a lower amount of returns are generally anticipated in
the initial years. So if you are looking at investing on a short term basis, then ULIPs are
not your best bet.
 o SWITCHES ARE CHARGEABLE BEYOND A POINT:
Most insurers provide free switches up to a certain number and there after, switches
are chargeable for each transaction.

o LOCK IN PERIOD:
ULIPs have a 5 year lock in period during which time, withdrawals cannot be made.

UNIT LINKED INSURANCE SCHEMES:

 BSLI Wealth Max Plan

 BSLI Wealth Secure Plan
 BSLI Wealth Assure Plan
 BSLI Fortune Elite Plan
 BSLI Wealth Aspire Plan

 BSLI WEALTH MAX PLAN:

In simple terms, this plan offers your family financial protection as
well as good returns from your investments by allowing you to choose how your
money is invested in 13 different funds.

Features and benefits:

 This is a single pay plan with the added bonus of financial growth.
 The plan gives you the flexibility to add top-ups whenever you have
additional savings.
 In case of financial emergencies, the plans gives you the flexibility of
partial withdrawals.
 The plan gives you the freedom to choose where you want your premium
to be invested.
 The fund value including any top-up fund value is paid on maturity of the
policy.

 BSLI WEALT SECURE PLAN:

The BSLI Wealth Secure Plan enables the policyholder to maximize
long term savings in combination wit whole life coverage. It lets the individual
choose an investment option best suited to his or her requirements as well as
offering financial security for the policyholder’s family.
 Features and benefits:
 Premiums are paid for a limited term but with whole life coverage.
 The plan gives you the flexibility to add-ups whenever you have
additional savings.
 The plan offers the flexibility of partial withdrawals to meet any
emergency fund requirements.
 Flexibility to redirect future premiums to new funds.

 BSLI WEALTH ASSURE PLAN:

The Birla sun life insurance from wealth assure plan is a protection
cum savings plan, that enables your wealth to grow steadily over time. It provides
financial security to meet requirements at different stages of life, offering capital
appreciation in tandem with insurance coverage.

Features and benefits:

 The plan protects your investment from market risks wile providing good
returns during favorable market conditions.
 The plan gives you the flexibility to add-ups whenever you have
additional savings.
 In case of financial emergencies, the plans gives you the flexibility of
partial withdrawals.
 The plan offers three different investment options
 Life cycle option
 Systematic transfer option
 Self-managed option

 BSLI FORTUNE ELITE PLAN:

Under the BSLI fortune elite plan, you decide how to invest your
premiums. However the investment risk in the investment funds chosen by you is
solely borne by you. Premium can be invested in one of three different investment
options.

Features and benefits:

 The fund value including any top-up fund value is paid on maturity of the
policy.
 Switching can be done to change between funds and also between
investment options except to the return optimizer option.
 Flexibility to redirect future premiums to new funds.
  Top-ups can also be done to increase the fund value and the subsequent
sum assured with a minimum value of Rs 5000/-
 The plan offers three different investment options
 Return optimizer option
 Systematic option
 Self-managed option

 BSLI WEALTH ASPIRE PLAN:

The BSLI wealth aspire plan is a plan designed to reward the policyholder
for policy continuance in the form of guaranteed additional units added to the
policy. This plan gives the policyholder the flexibility to choose from a wide
range of policy terms.

Features and benefits:

 Flexibility to choose premium paying terms from 5 to 40 years.
 The plan gives you the flexibility to add top-ups whenever you have
additional savings.
 The plan offers the flexibility of partial withdrawals to meet any
emergency fund requirements.
 The plan offers four different investment options,
 Return optimizer option.
 Systematic transfer option.
 Self-managed option.
 Smart option.

RISK:

Risk refers to the possibility that the actual outcome of an investment will differ from its
expected outcome. More specifically most investors are concerned about the actual outcome
being less than the expected outcome. The wider the range of possible outcomes the greater the
risk.

RISKS IN ULIPs

1. Investing in ULIPs is good idea-whether it is from LIC or BIRLA sun life or anyone else!
ULIP is the highest selling financial products in the country but unfortunately it is also the most
miss sold product. No agent will ever tell you that the up-front costs are as much as 30% in the
initial years.

2. So out of say rupees 10,000 that you invest rupees 3000 would go towards agent commission,
fund management charges, administration charges etc…

3. ULIPs allow you to switch from equity fund options to debt, usually without any fees, but
there is a key difference between ULIPs and other stock investments.

4. ULIPs are combination of insurance and investment. Since it is your protection cover that you
would be tempering with your decision to switch needs to be well throughout before you
exercise it in Birla sun life insurance.

5. Since ULIPs returns are directly linked to market performance and investment risks in
investment portfolio is borne entirely by the policy holder. One needs to thoroughly understand
the risk involved and one’s risk absorption capacity before to invest in ULIPs.

6. What are the charges fees and deductions in a ULIPs?

ULIPs offered by different insurers have varying charge structure. Broadly, the different types of
fees and charges are given below. However it may noted that insurers have the right to revise
fees and charges over a period of time.

A) Premium allocation charge:

This is a percentage of the premium appropriated towards charges before allocating the units
under the policy. This charge normally includes initial and renewal expenses a part from
commission expenses.

B) Mortality charge:

These are charges to provide for the cost of insurance coverage under the plan. Mortality charges
depend on number of factors such as age, amount of coverage, state of health, etc……
C) Fund management fees:

These are fees levied for management of the funds and are deducted before arriving at the net
assets value.

D) Policy/ administration charges:

These are fees for administration of the plan and levied by cancellation of units. This could be
flat through the policy term or very at a predetermined rate.

E) Surrender charges:

Surrender may be deducted premature partial or full encashment of units where ever applicable,
as mentioned in the policy conditions.

F) Service deduction:

Before allotment of the units the applicable service tax is deducted from the risk portion of the
premium.

7. Liquidity risk:

ULIP being an insurance product comes with a lock in period of 3 to 4 year. They are thus low in
liquidity and you may loss out of certain percentage of your investment. If you wish to redeem
during this lock in period.

8. Market risk:

ULIP are directly affected by the ups and downs in the capital market. Whether it is volatility
in the equity market or an increase or decline in interest rates, the net asset value of the fund is
impacted and may show a rise or fall.

9. Lock of guaranteed returns:

ULIP return is not guaranteed. The investment risk of a portfolio is borne by the policy holder.
10. High cost structure:

The charges in a ULIP are quite high. A fee structure especially during a decline in the market,
affects the returns on a UIPs.

The following are the some of the common types of fund available in India, along with an
indication of their risk characteristics.

General description Nature of investment Risk category

Equity funds Primarily invested in company Medium to high
stocks with the general aim of
capital appropriation.
Balanced funds Combining equity investment Medium
with fixed interest
instruments.
Income, fixed interest rates Invested in corporate bonds Medium
and bond funds (also known government securities, other
as secured funds) fixed income instruments
Cash funds ( also known as Some times as money market Low
secured funds funds invested in cash, bank
deposits and money market
instruments

RETURN:

Return is a primarily motivating force that derives investments. It represents rewards for
undertaking investments. Since the game of investments is about return (after allowing for the
risk), measurement of the realized (historical) returns is necessary to access how well the
investments manager has done. In addition, historical returns are often used as an important input
in estimating future (prospective) returns.
RETURN IN ULIPs

1. The insurance regulatory IRDA have give a more customer friendly avatar to the ULIPs in
Birla sun life insurance.

2. One of the major reforms in the guidelines was the introduction of cap on charges and
commission that could not be front loaded and had to be evenly distributed throughout the policy
firm. And also the regular mandated a higher death benefit and longer lock in period.

3. As a result, compared to the old ULIPs the new ones provide better avenues for wealth
creation along with adequate cover with reduced cost structure there is more that gets invested
and their fore makes a significant difference to the returns earned in the long term.

4. The upfront charges no uniformly distributed over the five years lock in period so a good
portion of the first year premium will invested and your money starts to grow from day one.

5. The lock in period has increased from 3 years to 5 years which ensures that these policies have
long term orientations and enjoy greater compounding benefits higher the returns the more your
earning get re-invested.

6. Insurers have launched plants with lower charges that the cap. In fact there are online ULIPs
in the market where you don’t have to pay any commission. So the whole money gets invested
and you are able to get higher compounding benefits.

7. In general ULIPs performances have been on a par with their mutual fund counter parts.
Additional charges are higher of policies will reduce an investor’s total returns.

8. Investors of under-performing funds could consider switching to better performing funds.

9. New ULIPs buyers should opt for equity investment in the few years and stay invested for
long-term.

10. Despite the steady and in line performance of these funds real return to investors in funds
over three years could be a lot lower than performance of ULPS.
11. The insurance regulatory and development authority came out with fresh set of ULIP
guidelines from September 1 2010, which lengthened the lock in period from three to five years
and restricted their fees and all other charges to the return.

12. Before these regulation came in all charges and other commission could amount to as a
Maria as 40-50% of an annual premium. In some differentiated ULIP’s charge were even higher.
All there are deducted from your annual investment.

13. The insurance company reduces the number of units in your ULIP’s to cover the allocation
charges so in return of ULIP’s.

14. So even if the performance of your ULIP has been reasonable and in line with the market
your final returns could be considerable lower as unit from your ULIP would have been deducted
to lower the cost.

15. However buyers of ULIP’s before September 2010 will see a lot higher charges curtailing
their returns says Hassija net returns for investors over the last five years would be much more
than for the new investors cost of ULIP’s were higher those days.

HOW DOES A UNIT LINKED PLAN WORK:

Here’s how unit linked plan works. you pay the premium in a ULIP. Alongside ,
there are several other investors who pay the premium and invest in the same portfolio. The
insurer further pools this money depending on the type of funds chosen. These funds can be
invested in either equity, debt or balanced funds.

This total corpus is further divided into units with a certain face value. The insurer allocates
unit’s to each investor in proportion to the invested in money. This units value is termed as net
asset value. Every insurer has a fund manager to keep a track of the invested funds. Based on
market performance. The units net asset value either increase or decrease, resulting in a higher or
a lower net asset value.

On the maturity of the ULIP, insurer pays you the fund value depending on the market value. In
case of any unforeseen situation like death, the insurer pays your nominee the higher of the sum
assured or the available fund value.
HOW TO COOSE A ULIP:

 POLICY TERM FLEXIBILITY:

Most unit linked insurance plans are long term and hence have a lock in
period. Hence, before you invest, you must ask yourself-how long do you want your
money to be invested in a policy? Based on the duration, you can choose from a
number of ULIP plans. Once invested, all ULIP plans have a five year of lock-period.

 INVESTMENT FLEXIBILITY:
ULIPs also allow you to choose the investment options before you select a
plan. According to your risk bearing capacity, a buyer can choose to invest in equity,
debt or a hybrid plan respectively.

 BASED ON PERSONAL INVESTMENT GOALS:

Before you wish to invest in a ULIP, it is imperative to define your long
term financial goals. More than anything, your long term goals should align with your
ULIP investment so that you invest in the correct kind of plan.

 COMPARE ULIP OFFERINGS:

Choosing the best ULIP plan is easier with the help of comparing tool. Use
these platforms to compare different unit linked insurance plans online.

ULIP RIDERS: The various types of riders offered are as following:

 Accidental death and permanent disability benefit rider:

If the life assured dies due to an accident during the policy duration, the life
insurance company pays base plan sum assured plus the rider benefit to the nominee.
This rider is basically to provide a supplementary coverage to the life assured’s loved
ones. However, an accident may not necessarily result in the death of the victim, but
leave the victim permanently disabled due to the loss of hands, legs, or cripple.
Consequently, the life assured won’t be able to work, earn money and pay the
premium. In such a case, the life assured with an accidental total and permanent
disability rider gets the rider cover.

 Critical illness rider:

Critical illness like cancer, rat attack, kidney failure, coronary artery bypass,
paralysis, etc. are sometimes fatal, leaving the suffer unable to work further. Moreover,
the treatment of such an illness is expensive. With a critical illness rider on your side,
all these expenses are compensated with a lump sum benefit given by the insurance
 company. The payout is made when the life assured is first diagnosed with any of the
critical illnesses as mentioned in the policy document.

 Term rider:
This type of rider offers a lump sum or monthly income to the nominee of the life
assured, in case death of the life assured during the term of the policy. This is
especially beneficial when the life assured was the only bread earner of the family.
Term rider gives a stipulated amount every month to ensure that the assured’s loved
ones are taken care of and monthly inflow of income continues to support everyday
needs.

 Waiver of premium:
Due to death (policyholder and insured are different), accidental permanent
disability or critical illness, your earning potential is hampered, and income comes to a
standstill. Consequently, you are incapable of paying premiums for the rest of the term.
If you stop paying the premium, your policy terminates. Once the policy terminates,
one cannot claim, which means there’s no maturity or death benefit. But with the
waiver of premium rider, your premiums are waived off in the event of disability
critical illness during the term of your premium. Your policy continues with all benefits
intact

1.3 REVIEW OF LITERATURE:

How a company does announced a name change especially when the old name was
well known? How does the company explain itself to constituents who may have known the
company quite well in an earlier incarnation but may be struggling to figure out what the new
organization stands for? How can the company create a new image while retaining the strengths
of the old one? And what role might corporate advertising play in all this? Corporate advertising
can tell a story about a company as a whole, large organizations may need to use corporate ads to
simplify their image in the minds of key constituents and to show what unifies the company,
despite the geographical spread and variety of its business.

We can very well understand the concept of corporate advertising by taking the example of
Aditya Birla sun life insurance . when company first began operations, the task was to present
the visiting card of the company to the public at large and build credibility and stature and to
give the consumer the confidence that “here is a company that can be trusted to invest funds
with.” This required a corporate campaign to establish the brand, build awareness and give the
brand a larger than life image.
 Dictionary of business and finance defines as follows: “Insurance is a form of contract or
agreement under which, one party agrees in return for a consideration to pay an agreed amount
of money to another party to make good for a loss, damage, or injury of something of value in
which the insured has a pecuniary interest as a result of some uncertain event”. (Motihar,2004).

Dictionary of commerce defines as follows: “Insurance is the payment of a sum of

money one by one person to another on the understanding that in specified circumstances the
second person will make good any loss suffered by the first.” (Motihar,2004).

In its legal aspects it is a contract, the insurer agreeing to make good any financial loss the
insured may suffer within the scope of the contract and the insured agreeing to pay a
consideration. Human life is exposed to innumerable risks. Life insurance is a contract providing
for payment of a sum of money to the person assured or, failing him to the person entitled to
receive the same, on the happening of certain event. Uncertainty of death is inherent in human
life; it is this uncertainty that is risk, which gives rise to the necessity for some form of protection
against the financial loss arising from death insurance substitutes this by certainty.

Life insurance provides the necessary defence in case of financial losses arising from uncertain
events, the complexity of life and changes in the social systems in India have increased the scope
of life insurance.
As with most insurance policies, life insurance is a contract between the insurer and the policy
owner whereby a benefit is paid to the designated beneficiaries if an insured event occurs which
is covered by the policy.

“life insurance contract may be defined as the contract, whereby the insurer in
consideration of a premium undertakes to pay a certain sum of money either on the death of the
insured or on the expiry of a fixed a period ”. (periyasamy, p, 2005).

Life insurance business is defined under section2(11) insurance act, 1938 as follows:
Life insurance business means, the business of effecting contract of insurance upon
human life, including any including any contract dependent on human life and any contract
which is subject to payment of premium for a term dependent on human life and shall be deemed
to include the granting of
 Disability and double or triple indemnity accident benefits, if so provided in the contract
insurance;
 Annuities upon human life; and
 Superannuation allowances and annuities payable out of any fund applicable solely to the
relief and maintenance of persons engaged or who have been engaged in any particular
profession, trade or employment or of the dependents of such person.

Mishra, K.C., and Sumitra Mishra (2000), have analyzed the position of insurance in USA,
Japan, U.K, and Germany, which are considered to be largest country level markets in the world.
They have recalled the fact that, insurance service is one of the most important constituents of
the economic development of the nations. They have emphasized the fact tat, insurance plays an
active role in promoting stability, facilitating trade and commerce, mobilizing savings, managing
financial risks more effectively, encouraging mitigation of loss and allocating capital efficiently.
Shesha Ayyar (2000), opined that, it would take seven to 10 years for the private insurers to
break- even, due to the fact that their operating cost which is high in the initial years affect their
profits.
Stuart Purdy (2003), has stated that the privatization process of the insurance industry has
resulted in providing new opportunities in terms of employment, savings, new channels of
insurance distribution and wider coverage to rural areas as well as the economically deprived
sections of the society. The presence of the strong and unbiased regulatory has contributed to the
success of the industry. He has expressed hope that, insurance industry would continue to grow
by taking pensions, savings and insurance products to the door steps of more and more
customers.

Tarun Kapoor (2003), identifies the major challenges ahead of the insurance industry to be:
product innovations, distribution network, customer service and education. He has suggested
that, in order to be successful, the insurance companies have to be innovative, select the right
type of distribution channel, offer continuous training, educate the customer, provide quality
service to customer and follow prudent investment pattern to increase the customer base.

The study undertaken by the Swiss Reinsurance company (2003), has revealed that despite
the growth in the premium, the penetration rate is very low and the biggest constraint on future
growth has been the slow deregulation. Competition ignited by the private players, joint ventures
formed by the global insurers with domestic partners and product innovations have been the
achievements of deregulation. However, the untapped potential of the domestic market, high
level of regulation and ensuring balance between the public and private companies have been
identified as the challenges.

Sunder Ram Korivi (2004), in his article “insurance sector in India-challenges ahead” has
stressed on the need to assess the true insurance needs of an insured and to guard against the
policy lapsing. He has also emphasized the need to redirect the funds into investments that will
have stable cash flows.

In his research paper, “A comparative study of the performance of life insurance players”,
Anil Chandok (2005), has analyzed the quantum of business procured by the private players and
the total business done. The study revealed that, the public are very careful in selecting their
insurers. Private players are still in the stage of extending their operations in many areas and in
metropolitan cities and the market share of the private players is better when compared to the
figure of India as a whole. He has concluded by saying that, proper orientation the private
insurers would be able to grow.

Rajesh. C. Jampala and Polavarapu Adilakshmi (2006), have identified the major challenges,
for Indian life insurance companies, to be stringent solvency norms, expense over runs, new
business strain, low agent productivity, high attrition level of agents, low average premiums and
high competition in the market place. They are of the opinion that, there is a great potential for
insurance business as the penetration level of insurance to gross domestic product is very low,
and selection of the right quality of business would ensure success for the private players.
 According to geethanjali mehlwal (2006), life insurance remains the primary focus of the
state as well as non-state players. The government plays an active role by removing investment
barriers and maintaining market checks through insurance regulatory development authority. The
author has stated that, India’s enormous population, abundant infrastructure facilities and
globally visible corporate success add to the country’s prospect for insurers looking for huge
future demands and alternatives to already tapped markets.

Kishore, R.B. (2006), has highlighted the success story of life insurance corporation. According
to him, the life insurance corporation has recorded a successful growth rate of 20.6 percentage
due to the introduction of time- tested traditional products and market-savvy unit linked plans in
tune with the market demands. He identifies an upward trend in terms of number of policies sold,
sum assured and the total assets held by the life insurance corporation. He has expressed hope
that, with the vast network of the agent force, the life insurance corporation would march ahead
to maintain its supremacy.

Richard Holloway and Rajagopalan Krisnamurthy (2006), are of the opinion tat, the success of
rural insurance business in India centers around innovative product design, increasing
penetration, finding effective and lower-cost distribution channels, education, access and
affordability. The risks involved and the adverse experience prevailing in rural area should be
considered while intensifying efforts to tackle the rural market. The authors insisted on the
introduction of suitable products at a right price and the usage of best practice actuarial technique
to re-price and redesign the rural products as necessary, taking into account experience that
emerges.

Pillai, VNS., (2007) has analyzed the relevance of life insurance at various levels. According to
the author, the best investment that offers income replacement on the occurance of the sudden
demise of the breadwinner is life insurance, for it offers security of capital. He has expressed ope
that, the demand for unit linked insurance policies would increase when compared to that of
other products. According to the study conducted, the flux of new products is primarily a
response to the recognition of the latent needs of the customers.

Sihv kumar singh, et al., (2007), have made an attempt to focus on changing scenario of Indian
insurance industry, as it has become a challenging task for the insurance companies to sustain
their competitiveness on a continuous basis along with winning the customer trust. The author
has opined that, deregulation in Indian business policy has resulted in increased number of
players in the market and hence, the competition; this has created a new business ambience
where benchmarking can originate customer-oriented innovative policies. The study arguably
states that, a competitive market should be able ensure that quality and fairly priced products are
made available. Government intervention is most needed to ensure that insurers are reliable,
because the national insurance industry contributes to the overall economic development.

The report released by the economic times (2008), as analyzed the growth in the insurance
sector after privatization. According to the report, the key driver for growth in the life insurance
business was the trend towards single premium business and pension and annuity products. The
industry was shifting from providing traditional products to the above mentioned sectors due to
the ageing population and reduction in the social security benefits, the report has stated.
Mc Kinsey company (2008), in a report reveals that, with household earnings accelerating in the
fast- growing economy, the life insurance income by way of premium could double from 40
billion dollars to 80 billion or even 100 billion dollars y 2012.
Marketing is a basic function of all business from that aim at profit generation and customer
satisfaction. It is the kingpin that’s sets the progress of the economy by providing want satisfying
products and services. Marketing encompasses all activities carried on to transfer the goods from
the manufactures to the customers. It involves the exchange of goods and services for money.
Determination of requirements of potential customers and supplying products to satisfy their
requirements is the crux of any marketing activity.

According to American Marketing Association (1960), marketing is concerned with the people
and the activities involved in the flow of goods and services from the producer to the customer”.

Kotler, P. and Armstrong, G (1996) define a service as any activity or benefit that one party an
offer to another that is essentially intangible and does not result in the ownership of anything.

In the words of William J. Stanton , et.al., (1994) services are identifiable intangible
activities that are the main object of a transaction designed to provide want-satisfaction to
customers.

Services include core services which may be the necessary outputs of an organization that
intend to provide the intangible benefits to customers and the peripheral services that are
indispensable for the execution of the core service and enhance the overall quality of the service
bundle.

The term insurance marketing refers to the marketing of insurance services with the motto
of customer- orientation and profit-generation. The insurance marketing focuses in the
formulation of an ideal mix for the insurance business so that the insurance organizations survive
and thrive in a right perspective. (Jha, S.M., 2003).

1.4 STATEMENT OF THE PROBLEM

The title of the present research is “RISK AND RETURN OF UNIT LINKED
INSURANCE PLAN OF BIRLA SUN LIFE INSURANCE” BRILA SUN LIFE INSURANCE
is a leading insurance conglomerate globally and the largest asset manager in the world.
Managing assets more than worth Rupee 9300 crores. BSLI, is the first in India a receive a
national insurer financial strength rating of AA(IND) by Fitch ratings.

Private insurance companies are in the infancy stage. The impact on the insurance market is
tangible the marketing strategies of these private operators have forced LIC to change its gears,
the market is more aware and realistic about investment and returns from insurance products.
Insurance business is more transparent as compared to the past. In this background this study
tries to analyze the investor’s behavior towards insurance products in general and BIRLA SUN
LIFE INSURANCE in particular.

1.5 NEED FOR THE STUDY

 Comparison of ULIPs would help the investors to select the plans which offer higher rate
of returns.
 Helps the company to come out with better portfolio for ULIPs.
 After the crises all over world market condition or critical so, I am study because of what
is impact on life insurance.

1.6 SOPE OF THE STUDY

In any research study, the scope of the study is vary vital and important. In the different
areas of management studies like marketing, human resource management, finance etc, studies
are investors behavior on ULIPs market with specific objectives in mind. The data collection
through a well framed questionnaire and using appropriate sampling procedures would bring out
the ground realities. Suitable strategies can be applied to enhance the returns, performance of
insurance industry as well as individuals consumption in the same.

In the present study, the factors influencing the investors behaviour on ULIPs market are
identified. The expectations of the security, demographic variables that influence the decision to
importance given to the different aspects and factor in the investors behaviour on ULIPs all these
attempts put together would improve the satisfaction of the investors on ULIPs marketing.

1.7 OBJECTIVES OF THE STUDY

 To analyze various schemes of ULIPs in Birla sun life insurance.
 To evaluate the risk and return of ULIPs in Aditya Birla sun life insurance.
 To study the investors perception towards ULIPs.

1.8 LIMIATIONS OF THE STUDY

 the study has been limited only to ULIP products of Aditya birla sun life insurance.
 Information gathered could be biased.
 Some of the customers could not give an accurate response to some of the questions.
 Time constraint is also one of the factor.
 Availability of confidential information is also a constraint.
 CHAPTER-2:
COMPANY PROFILE

PROFILE OF LIFE INSURANCE COMPANIES IN INDIA:

Aditya Birla Sun life insurance company limited (ABSLI) is a subsidiary of Aditya Birla
capital ltd. (ABCL) and is one of the leading private sector life insurance companies in India.
ABSLI was incorporated on August 4, 2000, and commenced operations on January 17, 2001.
ABSLI IS A 51:49 a joint venture between the Aditya Birla group and sun life financial
insurance., a leading international financial services organization in Canada.
Formerly known as Birla sun life insurance company limited, ABSLI is one of India’s leading
life insurance companies offering a range of products across the customer’s life cycle, including
children future plans, wealth protection plans, retirement and pension solutions, health plans,
traditional term plans and unit linked insurance plan (“ULIP”).
ABCL, the holding company, is a universal financial solutions provider and one of the largest
financial services players in India. It is committed to serving the end-to-end financial needs of its
retail and corporate customers under a unified brand – Aditya Birla capital. Delivering a wide
range of money solutions for protecting investing and financing, Aditya Birla capital serves
millions of customers across the country.
Apart from life insurance, ABCL has a significant presence across several business sectors
including NBFC, asset management, health insurance, housing finance, private equity, general
insurance broking, wealth management, broking, online personal finance management and
pension fund management
All private life insurance companies and public sector company operating in India during
2000-01 to 2009-10 were taken for the study. Life Insurance Corporation which is the only
public sector life insurer and twenty two private sector life insurers, most of them joint ventures
between Indian groups and global insurance giants, were taken for the study.
 Savanna D
Branch Manager at Aditya Birla-sun life Insurance Company Ltd
Bangalore, Karnataka, India

Insurance

1. Navistar Incorporation,
2. AEGON Religare Life Insurance Co.Ltd.,
3. HDFC Standard Life Insurance

1. Ymca sports school & College

COMPANY PROFILE OFADITYA BIRLA SUN LIFE INSURANCE:

1. BHARITI AXA LIFE INSURANCE:

Bharti AXA is a joint venture between Bharti Enterprises, a trusted brand name which
is the largest in the telecom industry with a strong financial base and AXA, world leader in
financial protection and wealth management and largest in the insurance industry (in terms of
revenue).

PROMOTER:
Sunil Bharti Mittal, Founder, Chairman and Managing Director of Bharti Group can be labeled
as the most ambitious telecom entrepreneur in India. Bharti Cellular Limited (BCL) was formed
by Mittal in the year 1995, to offer cellular services under the brand name Airtel. Within a few
years Bharti became the first telecom company to cross the 2-million mobile subscriber mark.
Now Mittal heads a successful empire focused on different areas of business with a market
capitalization of approximately $2 billion, employing over 5,000 people and still growing.

BHARTI AXA LIFE INSURANE:

Bharti AXA Life Insurance Company Limited started operations on 22nd Aug, 2006.
The company has sold 1, 65,703 numbers of policies as on 31st Dec, 2008. The premium
received by the company in the year 2008 was Rs.183 crore and the growth rate was 263%. It
was ranked 13th in 2008 as against 15th in 2007. The company is operating in 192 branches in
India. 21 Professionalism, innovation, team spirit, pragmatism and integrity are some of the
values of Bharti AXA.

STRATEGIES ADOPTED IN BHARTI AXA LIFE:

• To achieve a top 5 market position in India through a multi-distribution, multi-product
platform.
• To adapt AXA’s best practice blueprints as a sound platform for profitable growth.
• To leverage Bharti’s local knowledge, infrastructure and customer base.
• To deliver high levels of shareholder return.
• To build long term value with their business partners by enhancing the proposition for their
customers.
• To be the employer of choice to attract and retain the best talent in India
• To be recognized as being close and qualified by their customer
heen

VISION:
‘a trans- nationally competitive financial conglomerate of significance to societies and pride of
India

Every day we wake up to the fact that more than 220 million lives are part of our family called
lic

We are humbled by the magnitude of the responsibility we carry and realize that the lives that are
associated with us are very valuable indeed

Although this journey started five decades ago, we are still conscious of the fact that, while
insurance may be a business for us, being part of millions of lives every day for the past 52 years
has been a process called trust.

MISSION:
‘explore and enhance the quality of life of people through financial security by providing
products and services of aspired attributes with competitive, and by rendering

OBJECTIES:
 to know various products available at ABLI
 To determine the performance of ABLI products
 To determine and analyze the Market Potential of the Birla Sun Life Insurance Company.
 To study and determine the competitor position in the market

Logo:

HEADQUATERS: Elphinstone Road Mumbai, India

BRANCHES :
1. Aditya Birla sun life Insurance(.NAGAPUR)

2. Aditya Birla sun life Insurance(solapur)

 3. Aditya Birla sun life Insurance(.Hyderabad)

4. Aditya Birla sun life Insurance(Maharashtra)

5. Aditya Birla sun life Insurance(.Delhi)

6. Aditya Birla Sun Life Insurance( Bellary)

COMPETITORS:
1. Bajaj Alianj
2. Reliance Life Insurance
3. SBI Life insurance
4. Met Life India Insurance
5. Max New York Life Insurance

AWARDS AND RECOGNITION:

 'Gold Trophy' for Financial Reporting by The Institute of

 Chartered Accountants of India (ICAI) in 2012.
 Media Abby Awards at Goa Fest Advertising Agencies Association of India & Advertising
Club Bombay (2011)
 Grand Midas at the Midas Awards 2013 in Public Service Category for work titles as 'Death
Track'.
 Gold Midas Awards 2013 in Direct Mail/Collateral competition for work titled as 'Karva
Chauth'.
 IN PURSUIT OF OUR LEADERSHIP VISION:
 We are among the Top 5 Private Diversified NBFCs in India

 We are one of the largest Private Life Insurance Companies in India

 We are one of the largest Asset Management Companies in India

 We are one of the largest General Insurance Brokers in the country


 In pursuit of our desire to be a role model:
o We are today, a leading non-bank financial services player with a strong focus on quality of
growth

o We are renowned for risk management, people practices, sales management, investor education,
product innovation & fund management capabilities

o We are among the best 3 financial services players to work for [As per a study by Great Place to
Work Institute, 2016]

 We have continued to build a Broad based & Integrated financial services

business:
o We continue to be one of the few players in the industry with a diversified portfolio that allows
us to meet almost any customer need across the entire spectrum of his / her lifecycle

o Our integrated play has helped us gain a competitive edge by allowing us to share best practices,
derive cross-business synergies & provide our talent pool an opportunity to grow their career
through cross-functional and cross-sectoral experience

o Our distributors and partners see tremendous value in association with our businesses

o We are successfully expanding the market for our offerings, along with our market share in each
of our businesses.

 Financial Achievements as of March 31, 2017

o AUM - Rs. 2,463 billion has registered 34% y-o-y growth

o Our Consolidated Lending Book has grown over 40% Y-o-Y to Rs 388 billion

DEPARTMENTS:
1.Administative Service
2.Health Reform Information
3.ConsumerProtection
4.Legal Services
5.Property and casualty
6.Local Government Premium Tax

PRODUCTS AND SERVICES:

Life is unpredictable. But in face of adversity, our responsibilities towards our parents, children
and loved ones need not be compromised. Insurance pl anning equips you to
smooth out the uncertainties and adversities that life might send your way, so that the best
that life has to offer, secure in the knowledge that your beloved ones are well provided
for. BSLI offers a complete range of insurance products.

1. PROTECTION PLANS:
Secure your family's future in this increasingly uncertain world and don't leave their
dreams to fate.

If your dream for yourself and your loved ones is to live life on your own terms, then you will
need to ensure that this dream comes to fruition. The best way to do this is to take term
insurance. Aditya Birla Sun Life Insurance Company Limited (ABSLI) offers you the chance to
take term insurance plans that go a long way in ensuring that your family is cared for even when
storm clouds gather over the horizon.

ABSLI's Protection Solutions offer plans that provide complete financial security for your
family. One simple step you take today - of taking term insurance will offer you the chance to
get sizeable life coverage at low premiums.

ABSLI Protector Plus Plan

ABSLI Future Guard Plan

ABSLI Protect Ease Plan

 ABSLI Income Shield Plan

ABSLI DigiShield Plan

2. SAVINGS PLANS: Savings with Protection

The purpose of any responsible person's life is to create sufficient wealth and
security for the future. Every person works hard throughout life so that he and his loved ones
may enjoy every material comfort and not want for anything. This often entails compromising on
small joys in the present to enjoy a good life later.

But what if there was a way to enjoy a good standard of living and also save consistently for
future use? ABSLI savings with Protection Solutions offers you the chance to steadily save
money in small amounts, with the added advantages of a large life cover and tax free returns on
the endowment insurance plan. These small savings secure your future, and your loved ones can
be assured of stability even in your absence.

ABSLI Vision Money Back Plus Plan Know More MEET AN ADVISOR

ABSLI Vision Life Income Plan Know More MEET AN ADVISOR

ABSLI Vision Endowment Plan Know More MEET AN ADVISOR

ABSLI Savings Plan Know More MEET AN ADVISOR

ABSLI Vision Life Secure Plan Know More MEET AN ADVISOR

ABSLI Income Assured Plan Know More MEET AN ADVISOR

ABSLI Vision Regular Returns Plan

ABSLI Vision Endowment Plus Plan

 ABSLI Guaranteed Future Plan

ABSLI Guaranteed Milestone Plan

ABSLI Secure Plus Plan

3. CHILD PLANS: Children's Future Solutions

Your child brings you unceasing joy, and your entire life is focused towards helping
your child realize his every ambition. You work tirelessly to help your child realize his every
dream and every life goal…and a major part of your life is dedicated to ensuring that you have
the financial wherewithal to meet future expenses for your child.

These expenses include funding your child's foreign education, helping with capital to set up a
small home-based business or even paying for a lavish wedding. The best way to raise essential
funds for these expenses is to invest in child insurance plans. To this end, Aditya Birla Sun Life
Insurance Future Solutions extends a helping hand to parents who wish to convert their children's
every dream to reality.

ABSLI Vision Star Plan

4.WEALTH WITH PROTECTION SOLUTIONS:

It is important to have a dream in life, but it is even more important to have a plan
that makes your dream come true. Your dream could encompass anything – having a sports car,
buying a villa, taking a foreign vacation every year, starting a profitable business with your day
job, et al. Merely dreaming the dream will not make it come true, you will need a solid plan to
back your vision.

This plan will come through unit linked insurance plans under the aegis of the Aditya Birla Sun
Life Insurance Wealth with Protection Solutions. There are five plans on offer, which provide a
sizeable life insurance cover and help you save money regularly for the future.
 ABSLI Wealth Max Plan Know More MEET AN ADVISOR

ABSLI Wealth Secure Plan Know More MEET AN ADVISOR

ABSLI Wealth Assure Plan Know More MEET AN ADVISOR

ABSLI Fortune Elite Plan Know More MEET AN ADVISOR

ABSLI Wealth Aspire Plan

5 RETIREMENT PLANS: Retirement Solutions

The retirement years are a time of blissful rest and enjoyment of hobbies.
But it also brings with it a dreadful fact: your income stops, but your expenses continue
unabated. Suddenly, you begin to feel the financial pressures of daily living, as you realize that
your carefully cultivated savings are quickly whittled away to run your household expenses.
Inflation, rising living costs, dwindling savings…how will you combat these eventualities? You
can trust the Aditya Birla Sun Life Insurance Retirement Solutions , a retirement pension plan
that answers every financial conundrum that retirement may pose. With three excellent
retirement plans on offer, you can build a sizeable fund of money that will last you all through
your post-retirement stage.

ABSLI Empower Pension Plan Know More MEET AN ADVISOR

ABSLI Immediate Annuity Plan Know More MEET AN ADVISOR

ABSLI Empower Pension - SP Plan Know More MEET AN ADVISOR

Medical costs have skyrocketed over the years, and often we find ourselves struggling to arrange
for funds required during a medical emergency. Such unforeseen events can play havoc with our
financial planning and cause sleepless nights.

Here's when Aditya Birla Sun Life Insurance Health & Wellness Solutions come to the rescue.
Now you can focus on getting quality treatment, rather than having to worry about organizing the
funds. Our plans offer various options to insure yourself and your family for an adequate sum,
covering hospitalization, major illnesses and injuries.

ABSLI Hospital Plus Know More MEET AN ADVISOR

Plan

ABSLI Cancer Shield Know More MEET AN ADVISOR BUY ONLINE

Plan

ABSLI CritiShield Plan

6. HEALTH AND WELLNESS PLANS:

Aditya Birla health solutions are specifically curated to provide quality treatment
for the insurer’s family with an adequate sum covering hospitalization, major illnesses
and accidental injuries.

 ABSLI HOSPITAL PLUS PLAN: the ABSLI hospital plus plan offers a fixed
cash amount in the event of hospitalization. You can supplement your policy by
mitigating additional expenses with a flexibility of choosing from 4 benefit
options to suit your needs. This policy also entitles the insured tax benefits as per
section 80D of the income tax act, 1961.

 ABSLI CANCER SHIELD PLAN: the specialty of this plan is that it is meant to
provide cover at all stages of cancer that is early stage of cancer and major stage
of cancer. If the diagnosis states a major stage of cancer, you have an option to
receive monthly income for 5 policy years. The minimum sum insured is INR.
10,00,000/- while the maximum is limited to INR. 50,00,000/-
  ABSLI CRITISHIELD PLAN: certain diseases such as heart and kindly ailments
demand more money than hospital bills. Aditya Birla sun life insurance critishield
plan protects your savings and life style against such expenses. It covers all stages
of cardiac conditions and renal conditions with a waiver of premium for 5 years
on diagnosis of early stage conditions.
4.
 MODULE- 03

RESEARCH METHODOLOGY

The research methodology defines what the activity of research is, how to proceed, how
to measure progress, and what constitutes success. It provides us an advancement of wealth of
human knowledge, took of the trade to carry out research, tools to look at things in life
objectively; develops a critical and scientific attitude, displined thinking to observe objectively
(scientific deduction and inductive thinking); skills of research particularly in the age of
information. Also it defines the way in which the data are collected in a research project. In this
paper it presents one components of the research methodology.

3.1 Research design:

Descriptive research design is been taken

3.2 Sources of study:

For the purpose of the present study, data from two sources has been collected, namely
primary data and secondary data.

 Primary data:
Primary data is source from which the researcher collects the data. It is a firsthand data,
which is used directly for the analysis purpose. Primary data always gives a researcher a
fairer picture. In the present study primary data has been collected using structured
questionnaire. For the purpose of collecting the same, 50 respondents have been
randomly selected. Even the response of the respondents was taken into consideration,
primary data plays a vital role for analysis, interpretation, conclusion and suggestions.

 Secondary data:
Secondary data also plays a key factor in providing more information which will
influence the analysis. Few of the main sources of secondary data include newspapers,
magazines, business journals, and internet.

3.3 Sample area:

Ballari city is being taken as a sample area for study.

3.4 sample size:

The research made use of primary data, which was collected by the 50 respondents

3.5 Data collection instrument: Structured questionnaire

3.6 Data analysis and tools:

After the data collection from primary sources the data has been edited and analyzed and
findings extracted from this collected data. The various mathematical technique are used in data
analysis. Pie charts area used to present the collected data graphically.