Project Report on

Marketing Mix

OF

At

IDBI Federal Life Insurance Co Ltd- New Delhi

BY
DIMANSHU BAKSHI
COLLEGE OF VOCATIONAL STUDIES,DELHI
UNIVERSITY

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 A REPORT ON
MARKETING MIX OF IDBI Federal Life Insurance Co Ltd

A report submitted in partial fulfilment of the requirements of

COLLEGE OF VOCATIONAL STUDIES, DELHI UNIVERSITY

Submitted To: Company Guide:

Faculty Guide:
Mr. Manas Das
Dr. Meera Nangia
Sr. Branch Head
Professor
IDBI Federal Life
College of Vocational Studies

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CONTENTS

1. Authorization ………………………………………………….4

2. Acknowledgements ………………………………………….....5

3. Abstract ……………………………………………………........6

4. History of Insurance …………………………………………. …7

5. Recent Developments In Insurance Industry……………………10

6. Insurance and roll of financial services ………………………...11

7. Introduction of IDBI Federal ………………………….…….. . 12

8. Sponsors of IDBI …………………………………………..... 13

9. Products Given to Interns ………………………………………15

10.Pricing of Policies………………………………………………19

11.Calculating Premium……………………………………………21

12.Promotional activities of IDBI Federal…………………………25

13. Identifying People and Clients Needs………………………….28

14.Project Description ……………………………………………..32

15.Benefits from project …………………………………….......... 34

16.References………………………………………………………35

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 Authorization

This report is submitted as partial fulfillment of the requirement of PGPM Program

of IBS Mumbai. The Summer Internship Program is a part of the curriculum and is
mandatory for each student to perform the internship and prepare a report. It is
evident for every student and is authorized by the institute to do so.

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 Acknowledgements

I take this opportunity to express my profound gratitude and deep regards to my

company guide Mrs. Shanthi Yagyanath for her guidance, monitoring and constant
encouragement throughout the course of this internship.

I would also like to express a deep sense of gratitude to Dr. Pritee Saxena, my
faculty guide from IBS Mumbai, for her cordial support, valuable information and
guidance, which helped me in completing this task through various stages.

I also thank the faculty and placement cell of IBS Mumbai to help me get an
opportunity to work in this wonderful organization.

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 ABSTARCT

The internship project is concerned with working under IDBI Federal Life
Insurance Co. Ltd which is a joint venture of IDBI Bank offering Life Insurance
Plans, Life Insurance Policy, NAV, Insurance Plans and premium.
My work as a sales and marketing team was to do the same. I was introduced
with 4 Products of IDBI Life Insurance Co. Ltd i.e. Life Insurance Policy, Child
Insurance Policy, Wealth and Incomesurance Policy. This project helped me
in learning how a Insurance company works and prices for policy are set as
well as sales and marketing of Financial products are done.

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 HISTORY OF INSURANCE

The history of Insurance in India is deep-rooted. Since the earliest times insurance
has been carried out in some form or the other. Insurance in India has developed
overtime and has taken ideas from other countries- England in particular.
The history of insurance is divided into three phases as follows:

PHASE I – Pre Liberalization

PHASE II – Liberalization

PHASE III – Post Liberalization

Phase I – Pre- Liberalization

1818- 1829 First Insurance company in 1818 the Oriental Life insurance company in Kolkata
(then Calcutta) was the first company to start a life insurance business in india.
However, the company failed in 1834. In 1829 the Madras Equitable had begun
transacting Life insurance business in Madras Presidency.

1870 Following the enactment of the British Insurance act 1870, The last three decades of
the nineteenth century saw the creation of the Bombay Mutual, Oriental and Empire
of India in the Bombay Residency.

1912 The Indian Life Assurance Companies Act 1912 was the first statutory measure to
regulate Life Business.

The Indian Insurance Companies act 1928 gave the Government the power to

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 1928 collect statically information above both life and non life business transacted in
Indian by Indian and foreigner insurers, including provident insurance societies.

1938 To protect the interest of the insuring public, the earlier legislation was consolidated
and amended by the Insurance Act 1938 which gave the Government effective
control over the activities of insurers.

1950s In the 1950s, competition in the insurance business was very high and there were
allegations of unfair trade practices. The government of India therefore decided to
nationalize insurance business.

1957 Formation of the General insurance Council (GI Council) : the GI council
represents the collective interests of the non-life insurance companies in India. The
council speaks out on issues of common interest, participates in discussions related
to policy formation, and acts as an advocate for high standards of customer service
in the insurance industry.

1972 The General Insurance Business (Nationalization) Act 1972 was passed. The
General insurance Corporation of India was formed in pursurance of Section
9(1) of GIBNA. It was incorporated on 22 November 1972 under the companies Act
1956 as a private company limited by shares.

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PHASE II- Liberalization

The start of reform

The international payment crisis of the 1990s forced the Government to re-think its
industrial policies and regulations.

1993 Malhotra Committee: In 1993 the government set up a committee under

chairmanship of RN Malhotra, the former Governor of RBI, To make
recommendation for the reform of the insurance sector.

1999 Formation of IRDA: following the recommendations of the Malhotra committee

report, The Insurance regulatory and Development Authority was constituted as an
autonomous body in 1999 to regulate and develop the insurance industry. The IRDA
was incorporated as a statutory body in April 2000.

PHASE III – Post Liberalization

Recommendations of Malhotra Committee, the insurance sector were opened to
private companies. Foreign companies were also allowed to participate in Indian
Insurance market through joint ventures with Indian Companies. Under current
regulations for the foreign partner cannot hold more than 26% stake in the joint
venture.
The key objective of the IRDA includes the promotion of competition with a view
to increasing customer satisfaction through more consumer choice and lower
premiums, while ensuring the financial security of insurance market. The IRDA
has the power to make regulations under section 114A of insurance Act 1938.
Since 2000 it has introduced various regulations ranging from the registration of
companies for carrying on insurance business to the protection of policy holder’s
interest.

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 Recent developments in the insurance industry
By 2010 India was the fifth largest insurance market in the world and it is still
growing rapidly. There has been a lot of change in the decade since the market was
opened up to the private sector.

Further we will look at some of the important developments of the last few years .

Growing importance of All insurance companies now use information technology (IT) to benefit
their business and to improve convenience for their customers. Today,
IT
customers can pay their premiums and check the status and other details
of their policy using the company’s website. Updates relating to the
receipt of premiums or changes to their policy are sent to the customer
through mobile SMS.

Many banks have joined with insurance companies to cross-sell

insurance products to their customers. Insurance companies benefit from
the wide network and loyal customer base Of banks, and the contribution
Bancassurance that bancassurance makes to insurance sales has steadily grown over the
last few years. The banks benefit through being able to provide value-
added products to their customers and from the fee income they receive
in return from the insurance companies. Many banks have started their
own life insurance subsidiaries.

Most of the insurance companies have now started selling insurance

Online Sales products online. This eliminates the need for an intermediary and
reduces costs. This saving can be passed to customers in the form of
reduced premiums.

Micro-insurance products provide insurance protection to people in

lower income groups, such as self-help group (SHG) members, farmers,
rickshaw pullers and others against the risks that they and their assets are
Micro Insurance exposed to. The premiums for these products may be as low as Rs. 15
and are collected on a weekly basis.

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What is Insurance?
Insurance is a contract between the insurance company (insurer) and the
policyholder (insured). In return for a consideration (the premium), the insurance
company promises to pay a specified amount to the insured on the happening of a
specific event.

Role of financial services and insurance:

Insurance in particular benefits society economically and socially. Socially, it
protects people from financial hardship should a disaster happen, for example a
family that loses its income provider will not have to deprive its children of a
higher education.
Economically, it also provides employment. This is not just direct employment in
the industry itself, but also, because companies no longer have to hold funds in
reserve in case a disaster happens, they can invest those funds into their businesses.
The economic role is of particular importance because, according to the
Government, a lot of money needs to be invested into the basic infrastructure of
India if it is to continue to grow at its present rate. The Government’s expenses
already amount to more than its income, and so there is a role for private
companies to play in developing this infrastructure and this includes insurance
companies. The monies they raise from premiums can be invested into the
development of the basic infrastructure needs of India: needs such as irrigation,
housing, water, drainage and sanitation. In this way, insurance benefits society as a
whole, not just those who hold insurance.
Life insurance is a long-term commitment for the life insured; they will need to
keep paying the premium year after year for a long time. The long-term nature of
this relationship means that the insurance industry is particularly well placed to
meet the cost of providing infrastructure projects such as the building of airports,
roads, bridges, ports and power plants etc. – projects that take a long time to
develop.

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 INTRODUCTION OF COMPANY

About the Company:

IDBI Federal Life Insurance Co. Ltd is a joint venture of IDBI Bank, India’s
premier Development and commercial bank, Federal Bank, one of India’s leading
private sector Banks and Ageas, a multinational giant based out of Europe. In this
venture IDBI Owns 48% equity while Federal Bank and Ageas own 26% equity
each. Having started in March 2008, in just five months of inception, IDBI Federal
became one of the fastest growing new insurance companies by garnering Rs. 100
Cr in premiums. Through a continuous process of innovation in product and
service delivery IDBI Federal aims to deliver world class wealth management,
protection and retirement solutions that provide value and convenience to the
Indian customer. The company offers its services through a vast nationwide
network 2,308 partner bank branches of IDBI Bank and Federal Bank in addition
to a sizeable network of advisors and partners.

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 About The Sponsors of IDBI Federal Life Insurance Co Ltd

 IDBI Bank Ltd. is a Universal Bank with its operations driven by a Cutting edge
core Banking IT platform. The Bank offers personalized banking and financial
solutions to its clients in the retail and corporate banking arena through its large
network of Branches and ATMs, spread across length and breadth of India. They
have also set up an overseas branch at Dubai and have plans to open representative
offices in various other parts of Globe.

IDBI Bank is the youngest, new generation, public sector universal bank that rides
on a cutting edge core banking Information technology platform. This enables the
Bank to offer personalized banking and financial solutions to its clients.
The Bank had an aggregate balance sheet size of Rs. 3, 22,769 crore and total
business of Rs 4, 23,423 crore as on March 31, 2013. IDBI Bank's operations
during the financial year ended March 31, 2013 resulted in a net profit of Rs. 1882
crore continues to be, since its inception, India's premier industrial development
bank. It came into being as on July 01, 1964 to support India's industrial backbone.
Today, it is amongst India's foremost Commercial banks, with a wide range of
innovative products and services, serving retail and corporate customers in all
corners of the country from 1201 branches and 2156 ATMs.
The Bank offers its customers an extensive range of diversified services including
project finance, term lending, working capital facilities, lease finance, venture
capital, loan syndication, corporate advisory services and legal and technical
advisory services to its corporate clients as well as mortgages and personal loans to
its retail clients. As part of its development activities, IDBI Bank has been
instrumental in sponsoring the development of key institutions involved in India's
financial sector - National Stock Exchange of India Limited (NSE) and National
Securities Depository Ltd, SHCIL (Stock Holding Corporation of India Ltd),
CARE (Credit Analysis and Research Ltd).

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  Federal Bank is one of India's leading private sector banks, with a dominant
presence in the state of Kerala. The history of Federal bank dates back to the pre-
independence era. Though initially it was known as the Travancore Federal Bank,
it gradually transformed into a fully fledged bank under the able leadership of its
founder, Mr. KP Hormis. It has a strong network of over 1,142 branches and 1,312
ATMs spread across India. The bank provides over four million retail customers
with a wide variety of financial products. Federal Bank is one of the first large
Indian banks to have an entirely automated and interconnected branch network. In
addition to interconnected branches and ATMs, the Bank has a wide range of
services like Internet Banking, Mobile Banking, Tele Banking, and Any Where
Banking, debit cards, online bill payment and call centre facilities to offer round
the clock banking convenience to its customers.

The Bank has been a pioneer in providing innovative technological solutions to its
customers and the Bank has won several awards and recommendations.

 Ageas is an international insurance group with a heritage spanning more than 180
years. Ranked among the top 20 insurance companies in Europe, Ageas has chosen
to concentrate its business activities in Europe and Asia, which together make up
the largest share of the global insurance market. These are grouped around four
segments: Belgium, United Kingdom, Continental Europe and Asia and served
through a combination of wholly owned subsidiaries and partnerships with strong
financial institutions and key distributors around the world. Ageas operates
successful partnerships in Belgium, UK, Luxembourg, Italy, Portugal, Turkey,
China, Malaysia, India and Thailand and has subsidiaries in France, Hong Kong
and UK.

Ageas is the market leader in Belgium for individual life and employee benefits, as
well as a leading non-life player through AG Insurance. In the UK, Ageas has a
strong presence as the fourth largest player in private car insurance and the over
50's market. Ageas employs more than 13,000 people and has annual inflows of
more than EUR 21 billion.

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 PRODUCTS THAT WERE INTRODUCED TO INTERNS

IDBI Federal Childsurance is a non-linked

participating endowment plan that ensures
child’s future financial needs are fulfilled. It is
designed to give customer guaranteed annual
payouts and aid the important milestones in
their child’s life.

HOW DOES THIS PLAN WORK

1. Customer needs to decide the amount of guaranteed annual payouts he would need which
will depend on plans for his child’s future.
2. Basis the amount of payouts, he would then choose the Maturity Sum Assured (MSA).
3. Next, he would choose when and for how long he would need the payouts – the difference
between child’s current age and the age at which the guaranteed annual payouts should end,
will be the policy term. This can help plan his child’s future better.

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 IDBI Federal Wealthsurance Suvidha
Growth Insurance Plan is a simple unit
linked plan that helps customer take their
first step towards wealth creation and that
too, with ease. What’s more, the life cover
with this plan provides financial protection
for loved ones.

Wealthsurance Plans guarantees following:

 Financial protection against uncertainty

 Partial withdrawals for emergency fund requirements
 Guaranteed loyalty additions to boost your wealth
 Flexible to switch funds and investment options
 Option to choose how long you want to stay invested
 Get 2 Tax benefit of 80 C and 10(10 D

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 IDBI Federal Incomesurance™ Guaranteed
Money Back Insurance Plan is a non-linked non-
participating money back plan which gives
customer guaranteed* returns on investment, so
that they stop worrying about the future.

With Incomesurance, customer can guarantee a

secure future for their family even when they are
not around

HOW DOES THIS PLAN WORK

Incomesurance is a simple plan with guaranteed benefits. On payment of premiums for 5 years
customer will receive guaranteed annual payouts at the end of every year for the next 5 years. At
the time of purchasing the policy, he will know exactly how much he will receive as guaranteed
annual payouts. The guaranteed annual payouts that will be received will depend on two factors -
the amount of annual premium that he will pay and age.

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 IDBI Federal Lifesurance savings insurance plan
is a fixed term non-linked participating plan that
provides twin benefits of long-term savings and
life cover.

With Lifesurance Savings, small savings will help

customer realize the big dreams that he has for
himself and his family. This plan also offers the
benefit of life cover that will provide financial
security to family in his absence.

BENEFITS OF THIS PLAN

 Financial protection against uncertainty

 Lump sum payout at maturity
 Guaranteed additions to safeguard as per your need
 Flexible to choose options as per your need
 Bonuses to boost your savings
 Get 2 Tax benefit of 80C and 10(10D)

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 PRICING AND CALCULATING THE PREMIUM

Pricing refers to the calculation of premium that will be charged on the insurance
policy.
The pricing of the insurance policy is an important decision for the insurance
company and it will have a number of prime objectives in mind in this respect.
In addition to being corned about charging premiums that are sufficient to meet
claims, expenses and produce profits at the desired level, the company will also be
keen to ensure that premiums are competitive so that it does not lose business to
other insurance companies in the mortality tables.

PRICING ELEMENTS
Mortality rates:
As mentioned already that insurers use mortality tables to help calculate the
premium. These tables also contain mortality rates, which in simple words can be
defined as the probability that a certain individual will die before their next
birthday.

Loading:
All companies incur expenses in going about their business and insurance
companies are no different. The premium is the key source of income for an
insurance company and so the premium needs to convert the cost of meeting these
expenses. The addition of these expenses to the premium is called loading.

Income from investment of premium:

The premium that is collected by insurance companies for traditional plans are
invested as mandated in Insurance Act 1938. The profits they earn from their
investment can help to cover the insurance company’s expenses and so can be
taken into account while considering the price.

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 Benefits promised:
The pricing will depend upon the benefits promised by the company. The larger
the benefits offered by the insurance company, the higher the premium will need to
be cover the cost of providing that benefit.
With profit-policyholders pay a slightly higher premium for the benefit of sharing
in the bonuses and are generally rewarded well by bonus declaration.

Premium Plan Being Taken:

The policyholder can pay the premium in a number of ways:

Single premium plan In this plan policy holder pays a single lump sum payment at the
inception of the policy. The premium amount should be sufficient to
meet the administrative and other expenses during the entire term of
the policy.

Level Premium Plan In this type of plan policyholder pays the same amount of premium for
the entire duration of the policy. When pricing this sort of policy the
insurance company will need to allow the time value of money i.e. it
should be sufficient to meet future claims.

Flexible Premium Plan Insurance companies also allow the policyholder to choose a flexible
premium payment plan, where the policyholder can pay the premium
amount at their convenience. They can choose whether they wish the
premium to remain the same over the term or to change the amount of
premium paid based on affordability.

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 CALCULATING PREMIUM

The process of calculating the premium is as follows:

Calculate the risk premium

Based on risk premium, calculate the level premium

Deduct the expected interest on investments to calculate the net premium

Add the loadings

Arrive at the gross premium to be charged

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 A. Calculate the risk premium:

The life insurance premiums collected by the insurance company are kept in a
single pool, known as the common fund or life fund. All the future claims on the
company are settled using this common fund. Therefore, the insurance company
has to make sure that there is enough in the common fund to meet those claims.
Determining the correct amount for the common fund is a difficult task, as no one
can accurately predict the future. However, as we have seen, using the statistics on
death rates from previous years, insurance companies can now estimate fairly
accurately the probability of an individual dying before their next birthday. This
probability – known as the mortality rate – is used to calculate the risk premium.
The risk premium is calculated using the mortality rates in the mortality table of
the respective insurance company. The formula is:
Risk Premium = Mortality Rate * Sum assured
The risk premium is the premium that has to be charged just to meet the claims of
those who die during the year.

B. Based on risk premium, calculate the level premium

With many life insurance policies the insurance company charges the same amount
of premium for the entire policy term: it cannot be changed. Therefore, the
premium set will need to take into consideration the future expenses and claims
that the insurance company will have to pay. It will also need to take into account
the effects of inflation, which means that the value of money decreases over time,
so the premium the policyholder pays now will not hold the same value in later
years. This means that the cost of inflation will be borne by the insurance company
in the later years of the policy. Consequently, the premium will need to be set at a
higher level than would appear to be appropriate initially. The higher premium
collected in the early years is put into a reserve by the insurance company to meet
the cost of future claims and expenses.

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 C. Calculate the net premium

The premium that is collected by the insurance companies for traditional plans is
invested in securities as mandated in the Insurance Act 1938. The insurance
companies earn interest as income from their investments. This interest earned is
also considered for the premium calculation. The actuaries make an estimate of the
amount of interest that the investments are expected to earn. Based on the estimate
of these interest earnings the premium charge can be reduced.
Premium – Interest Earnings = Net Premium

There are some important points to remember when thinking about how the
premium is adjusted for the interest earned on its investment:
• The premium is invested, until it is required to pay claims;
• For level premiums, the reserve funds are also invested; and
• The interest expected to be earned also depends upon the term of the policy.

D. Add loadings

A further adjustment is made to the net premium in order to calculate the gross
premium (the actual premium that is paid by the policyholder). This adjustment is
to take account of the expenses and profit of the insurance company. This process
is known as loading.
The following items are added in loading:
• Administrative expenses, such as the cost of running the building, employees’
salaries, etc.
• Medical expenses incurred for medical underwriting;
• Processing fee;
• Expenses involved in the renewal of the policy;
• claim settlement expenses;

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 • Profit margin; and
• Bonus loading for with-profit policies

E. Arrive at gross premium to be charged

The type of policy – whether it is a single premium plan, a level premium plan,
flexible premium plan or an annually renewable plan – will affect the gross
premium to be charged. For instance, when calculating the premium for a single
premium plan the insurance company will need to determine how many
policyholders are likely to take up the plan and how many death claims it will
expect to have to pay during the policy term.
Similarly, whether the premium is to be paid annually, semi-annually, and
quarterly or monthly will also need to be taken into account. Most insurance
company’s first calculate the premium for annual payment, and then make a further
adjustment for monthly payment. Insurance companies generally collect a
‘frequency loading’ if the premium is not being paid annually.

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PROMOTIOAL ACTIVITIES OF IDBI FEDERAL (MARKETING
STRATEGIES.)

Promotion is one of the four elements of marketing mix (product, price, promotion,
and place). It is the communication link between sellers and buyers for the purpose
of influencing, informing, or persuading a potential buyer's purchasing decision.

The following are two types of promotion:

1. Above the line promotion: Promotion in mass media (e.g. TV, radio,
Newspapers, internet, mobile phones) in which the advertiser pays an
advertising agency to place the advertisements.

2. Below the Line Promotion: Much of this is intended to be subtle enough for
the consumer to be unaware that promotion is taking place.

3. E.g., Sponsorship, testimonials, sales promotion, merchandising, direct

mail, personal selling, PR, trade shows

The specification of five elements creates a promotional mix or promotional plan.

These elements are personal selling, advertising, sales promotion, direct marketing
and publicity. A promotional mix specifies how much attention to pay to each of
the five subcategories, and how much money to budget for each. A promotional
plan can have a wide range of objectives, including: sales increases, new product
acceptance, creation of brand equity positioning, competitive retaliations, or
creation of a corporate image fundamentally, however there are three basic
objectives of promotion.
These are:

1. To present information to consumers as well as others

2. To increase demand
3. To differentiate a product.

Here we have to find out:

 how effectively advertisements influence a person to buy the life insurance
products

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  The find whether IDBI federal needs brand ambassador to reach the
customer effectively
 Identifying the role of advertisements for life insurance products
Following are the main ways in which IDBI Federal life Insurance company ltd
promotes its products/services and creates awareness in the market.

NEWSPAPER:

IDBI Federal has attained notice through many articles and advertisements
published in various national and regional newspapers in India like the Economic
Times, Times of India, The Hindu , Samachar Jagat, Vir Arjun, Meghalaya
Guardian etc. IDBI Federal spends around Rs 1040 per sq.cm for promotional
activities through newspapers. They position the ads and articles in such a way that
it catches the eye of the reader as soon as they start reading the newspaper.

HOARDINGS:

IDBI Federal has also tried making their potential customer aware of their
products and policies through billboards and hoardings by positioning them in
strategic locations. As of now, the total number of hoardings which are put up in
Hyderabad region counts to a good 17 number. The total expenses spent by the
company for this promotional activity is Rs 4 Lakh.

PAMPHLETS:

Pamphlets are distributed across India at least 5 times in a month without any cost.
It’s done to create maximum awareness about the products/services.

MAGAZINES:

There is no specific magazine in which advertisement is given. It’s given in

magazines depending upon their sales and reputed magazines like Outlook, Money
etc. The advertisement is given every month at least once in any magazine.

TELEVISION:

Mainly, the advertisement is shown on cricket channels, Star channels. The main
promotions were done during FEB & MARCH to:

1. Highlight the tax benefit

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 2. To combat competition as all the insurance companies would advertise
during this time at a great frequency. Also the company will soon start
displaying their advertisements on Satellite TV like SUN network, etc.
DISTRIBUTORS:

A strong network of distributors and parent advisors also helps a lot in promoting
products/services of IDBI Federal by word of mouth. A Viral campaign is also run
on the Internet by wherein flash videos of working of products are explained in a
very humorous manner.

LOCAL EVENTS:

The overall costs associated with such events totals to Rs. 2, 00,000 per annum
such events are mainly conducted in Apartments, Schools, etc. Building an
engagement process around the solution being offered gives an additional boost to
this cause. Spelling Bee was a specially created spelling contest created to connect
with children. The engagement started with the spelling contest for kids and gave
natural opening for a discussion with parents about financial planning for their
children’s future needs like education. This is a sort of channel marketing which
IDBI Federal had adopted to create awareness as well as to educate the future
generation about the company and the importance of saving.

Also IDBI Federal involved them in developing their business by joining hands
with SAMHITA, a community development organization based out of Bhopal
which works towards bringing financial literacy to the underprivileged population
in Madhya Pradesh. They believe that such financial literacy among the under
banked population will help bring a holistic change in the way people perceive and
understand financial products and their utility at various stages in their life.
This will ultimately help bring them closer to financial inclusion

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 IDENTIFYING PEOPLE AND THEIR NEEDS

Who is client?
Prospective clients
An insurance agent’s main task is to understand their client’s needs and then
recommend suitable products. Any individual that an insurance agent comes across
and who has any financial need is a prospective client. Prospective clients may
have various needs which they themselves may not be aware of. In such a case it is
the duty of the insurance agent to make the prospective client realize their needs
and recommend suitable insurance protection and/or investment products to meet
them.
The need to:
• provide sufficient funds for dependants in case of the premature death of the
family income provider;
• build a contingency fund to take care of any emergencies that may arise;
• save funds for the children’s education, marriage etc;
• provide protection for family members against home loan and other debts in the
absence of the family income provider;
• save funds for retirement; and
• address any other requirements that may arise from time to time.
Any individual who has at least one of the above needs is a prospective client for
the insurance agent.

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CLIENT NEEDS
As we have established, it is the responsibility of the insurance agent to determine
the legitimate needs of their clients, priorities them and then to recommend suitable
insurance or savings products. The process involves the following steps:

Identifying needs Quantifying needs  Prioritizing needs

1. Identifying needs: An insurance agent needs to collect and analyse the

following information:
• Details of the client in terms of their financial assets and liabilities;
• Marital status;
• Future financial goals of the client for themselves and their children;
• Number and age of dependants;
• Employment status, i.e. their existing grade and scope of promotion within their
company;
• Income – which includes salary, business income and income from other sources
and investments (if any);
• Details of health status and heredity medical conditions; and
• Existing protection, savings and retirement provision (if any).

2. Quantifying needs: in the financial planning process an insurance agent needs

to quantify each of the needs in monetary-terms and then calculate suitable
amounts that an individual needs to save and invest for the future.

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 3. Prioritizing needs: the amount available for investment is the client’s income
less their living and other expenses, i.e. the monthly surplus available. The client’s
needs must be prioritized, as their investment capacity may be limited and the total
amount to be spent may be more than the surplus funds available.
The insurance agent should suggest the best product mix, where limited funds can
be allocated to full fill the maximum needs of the client. Prioritizing these needs
helps the client to determine which investment(s) can be deferred, and so the needs
which are given highest priority in the ranking are the ones for which investment
should be made first.

Client needs: real and perceived

It is important to understand that there are differences between real and perceived
needs. Real needs are the actual needs of a client which should take priority over
others, whereas perceived needs are imagined or thought to be important by the
client (for example wanting to buy an expensive car when there is adequate public
transport and the client has insufficient savings or income to buy one).
Real needs are determined by the use of financial planning techniques and analysis.
Perceived needs can be understood by analyzing an individual’s thoughts and
desires. Let’s have a look at some of the problems faced by agents in advising
clients about real and perceived needs:
• Different financial needs occur at different stages of the lifecycle of an individual.
However, when the time comes for financial planning, an investor might shy away
from actually making investments. A young man might aspire to have Rs. 10,
00,000 ten years from now, but for this he needs to sacrifice some of his leisure
activities and save and invest regularly.
• The second problem is that clients often fail to understand the importance of
saving for the future and do not appreciate the benefits that this will bring. They
will want to give priority to their present needs as opposed to their future
intangible needs.
• Individuals may not understand their real needs and may fail to priorities them
sensibly. There can be cases where an individual might choose to invest in child
plans first, whereas their priority need would be to provide financial protection for
their family in the event of their premature death, illness or disability.

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The job of an insurance agent is to help clients in identifying real needs:

Identification of real Insurance agents should help their clients in understanding

needs their real needs. This can be done by educating them about
the concept and importance of insurance.

Identification of current Insurance agents should help their clients in understanding

and future needs their current and future needs.

Quantification and Once the needs are identified, they must be quantified in
prioritization of needs terms of monetary value and prioritized.

Financial planning Clients should meet with their agents regularly to review
review whether their financial planning needs have changed over
time. If so, then new investments should be made to suit the
changed circumstances.

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 Project Description

Duration (Date Wise) – 1st JUNE TO 31st JULY

Duration – 2 Months

Location – New Delhi

JOB ROLES

Mainly I was acting as an insurance agent for IDBI Federal Life Insurance Co Ltd.
My task for two months was dynamic and interactive. I was told to get down on
fields and interact with customers and tell them about the Insurance policies so as
mm

 Consumer Behavior
 Sales and marketing of financial product
 Better understanding of financial product
 Pitching offers

Work Progress

The work commenced for the interns from the 1st of February 2016 at the IDBI
Federal Life Insurance Co Ltd, Pitampura branch, New Delhi. I was assigned to
work as marketing and sales agent where we were told to sell the products that we
were introduced to. At the initial stage we were told about the different products
IDBI Federal has and the glimpse of the working scenario and how different
projects and clients were handled.
Initially I was introduced to two most important company mentors and the
important role they play.

 Mr. Manas Das- Asst Branch Head

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  Mr. Sachin Garg- Manager distribution (chief)

Now we would be having 5-6 hours of session everyday in New Delhi in which we
would be given a detailed description about the company and its products and after
that an exam would be conducted in 29th June 2013.

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 BENEFITS FROM THE PROJECT

 Getting associated with Insurance industry which is fastest growing insurance

company in India.

 Learning al the important points which affects the pricing and selling of company’s
product.

 The high level of customer interaction and understanding the different behavior
associated with the client.

 Learning each and every point related to work flow of Insurance sector industry.

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 RECOMMENDATIONS

It should target the target the rural rich populace first and should try and custumize service with
accordance to the needs of the poor

Especially women should be their next target as the penetration in this segment is pretty low.

It should use banc assurance to its fullest use those banks which have a good rural penetration to
serve or sell its products.

If it can tie up with SBI then there would be more credibility to its products as people tend to
have more trust in the rural segment.

Extremely high class agents should be recruited as at the end of the day they are the brand
ambassadors for the organization.

Benchmarking the products against LIC and ICICI are going to bring in the best results.

Companies abroad have started big data in a big way to carry out analysis of which portions to
approach in a geographical location and how much to charge for premiums.

To create a pull approach rather than a push approach.

To make smokers and other people aware of the fact that even if they have an earlier ailment that
does not prevent them from having a health insurance.

CONCLUSION

The right service model, a low cost platform, partnership with an Indian PSB, focus on brand
building, trust, and good governance along with customized products for the ever expanding
client base in India will help them in carving out their own space.

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 REFERENCES

Books

Bogan, C.E. and English, M.J. (1994:). Benchmarking for Best Practices: Winning
through Innovative Adaptation. New York: McGraw-Hill

Kotler, Philip & Keller, L. Kevin (2012). Marketing Management 14e. Pearson
Education Limited 2012

Zikmund, W.G.; Babbin, Barry J.; Carr, Jon C. and Griffin, Mitch (2013), Business
Research Methods, South-Western CENGAGE Learning, USA.

Article in a Newspaper

Brooks Peter (2011), Indian investors are less risk taking compared to Hong Kong,
Taiwan and Indonesia: Peter Brooks, Barclays Wealth, The Economic Times, Jul 8

All The pictures are taken from the site of IDBI Federal life insurance.

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