Summer Internship

Internship Project Report

On
Alternate Mode Penetration In Retail Agency
Channel For SBI Life

Submitted To-
MR.AJAY TIWARI (Regional P.S Head)

Submitted By-
SHIPRA GUPTA
(Banaras Hindu University)

[1]
 Table Of Content
S.No Content Page
. No.
1 Introduction 6-20
1.1 Evolution of Insurance Industry
1.2 Meaning of Life Insurance
1.3 Role of Life Insurance
1.4 IRDA
1.5 Background of SBI Life
1.6 Product offered By SBI Life
2 Project Proposed 21-29
2.1 Introduction
2.2 Renewal Premium
2.3 Methods of Paying Renewal Premium
2.4 Alternate Mode
2.5 Objective of the Project
2.6 Methodology
2.7 Sampling
3 Findings and Interpretation 32-43
4 Suggestion 44
5 Conclusion 45-46
6 Annexure 47-49
7 Bibliography 50

[2]
 PREFACE
During this as a part of MBA curricular Research Report was undertaken with SBI
Life Insurance Company Ltd. which is among the top Life Insurance Companies In
the world.
The Purpose of this training was to have practical experience of working in an
organisation.
To get Exposure to various Management practices in the field of Operation apart
from the Research to have the practical experience of this project was assigned to
me
The report is an attempt to go through the details of penetration of SBI Life and to
study the strategy of the organization.
No professional curriculum is considered complete without work experience. Every
individual who study before he/she can consider himself/herself Fully Qualified as a
Potential Manager.

[3]
 Declaration

I, the undersigned, hereby declare that the project report entitled, "Alternate Mode
Penetration In Retail Agency Channel For SBI Life, submitted by me to Banaras
Hindu University, Varanasi, in partial fulfilment of the requirement for the award of degree
of Master of Business Administration under the guidance of MR. AJAY TIWARI(Regional
P.S Head) , is my original work and the conclusions drawn therein are based on the data
provided by the company officials.
The Report submitted is my own work and has not been duplicated from any other source.
The results embodied in this thesis have not been submitted to any other University or
Institute for any other degree or diploma.
Name: SHIPRA GUPTA
Date: July 21st, 2018
Place: Varanasi

[4]
 ACKNOWLEDGEMENT

I would like to extend my gratitude to all those who, one way or another helped me in the
completion of the project.
I would like to thank all of them for making this journey a knowledgeable and enjoyable
one and for enlightening me with their wisdom and sharing their valuable experiences with
me.
I express my deepest thanks to my Company Guide MR. AJAY TIWARI (Regional P.S
Head) for taking part in useful decisions & giving necessary advices and guidance and
arranged all facilities to make the training a memorable one. I choose this moment to
acknowledge his contribution gratefully.
Last but not the least I am indebted to Banaras Hindu University for giving me a wonderful
opportunity to have a hands on approach in Risk and Insurance field. I am also grateful to
all the professors, staff and students who are responsible directly or indirectly in
completion of the project.

1.Introduction
Evolution Of Insurance Industry

[5]
Some kind of life insurance was practiced in ancient Rome, where citizens used to form
burial clubs that would meet the funeral expenses of its members. The code of ‘Manu’ that
was in force during the Reign of Cholas in South India shows that there was the practice
of marine insurance carried out by traders in India with those in Sri Lanka, Egypt and
Greece. As the European civilization progressed, welfare practices also became more
refined. With the discovery of new lands, sea routes and the consequent growth in trade,
there was a need to protect the traders from loss on account of fire, shipwrecks and the
like. As a result the need for insurance came into existence.

Meaning Of Insurance
Insurance is “a contract for reducing losses from accident incurred by an individual party
through a distribution of the risk of such losses among a number of parties”.
The definition goes on to say: “In return for a specified consideration, the insurer
undertakes to pay the insured or his beneficiary some specified amount in the event that
the insured suffers loss by pooling both the financial contributions and the ‘insurable risks’
of a large number of policyholders. The insured is typically able to absorb losses incurred
over any given period much more easily than would the uninsured individual”.

Life Insurance
Life Insurance is a contract between person and a life insurance company, which provides
your beneficiary with a pre-determined amount in case of your death during the contract
term. Buying insurance is extremely useful if you are the principal earning member in the
family. In case of your unfortunate premature demise, your family can remain financially
secure because of the life insurance policy that you have purchased. The primary
purpose of life insurance is therefore protection of the family in the event of death. Today,
insurance is also seen as a tool to plan effectively for your future years, your retirement,
and for your children's future needs. Today, the market offers insurance plans that not just
cover your life and but at the same time grow your wealth too.

History of Life Insurance in India

[6]
The insurance sector in India has come back to the square one from being an open
competitive market to nationalization and back to a liberalized market once again. The
business of life insurance started in India in the year 1818, with the establishment of the
Oriental Life Insurance Company in Calcutta.

Milestones in the Life Insurance Business in India:

• 1912: The Indian Life Insurance Companies Act enacted as the first statute to regulate
the life insurance business.
• 1928: The Indian Insurance Companies Act enacted to enable the government to collect
statistical information both about life and non-life insurance businesses. 11
• 1938: Earlier legislation consolidated and amended to by the Insurance Act with the
objective of protecting the interests of the insuring public.
• 1956: 245 Indian and Foreign Insurers and Provident Societies taken over by the
Central Government and nationalised.

ROLE OF LIFE INSURANCE

Role 1: Life insurance as "Investment"

Insurance is an attractive option for investment. While most people recognize the risk
hedging and tax saving potential of insurance, many are not aware of its advantages as
an investment option as well. Insurance products yield more compared to regular
investment options, and this is besides the added incentives (read bonuses) offered by
insurers. You cannot compare an insurance product with other investment schemes for
the simple reason that it offers financial protection from risks, something that is missing in
non-insurance products. In fact, the premium you pay for an insurance policy is an
investment against risk. Thus, before comparing with other schemes, you must accept
that a part of the total amount invested in life insurance goes towards providing for the risk
cover, while the rest is used for savings. In life insurance, unlike non-life products, you get
maturity benefits on survival at the end of the term. In other words, if you take a life
insurance policy for 20 years and survive the term, the amount invested as premium in the
policy will come back to you with added returns. In the unfortunate event of death within

[7]
the tenure of the policy, the family of the deceased will receive the sum assured. Now, let
us compare insurance as an investment options. If you invest Rs 10,000 in PPF, your
money grows to Rs 10,950 at 9.5 per cent interest over a year. But in this case, the
access to your funds will be limited. One can withdraw 50 per cent of the initial deposit
only after 4 years. The same amount of Rs 10,000 can give you an insurance cover of up
to approximately Rs 5-12 lakh (depending upon the plan, age and medical condition of the
life insured, etc) and this amount can become immediately available to the nominee of the
policyholder on death. Thus insurance is a unique investment avenue that delivers sound
returns in addition to protection.

Role 2: Life insurance as "Risk cover"

First and foremost, insurance is about risk cover and protection - financial protection, to
be more precise - to help outlast life's unpredictable losses. Designed to safeguard
against losses suffered on account of any unforeseen event, insurance provides you with
that unique sense of security that no other form of investment provides. By buying life
insurance, you buy peace of mind and are prepared to face any financial demand that
would hit the family in case of an untimely demise. To provide such protection, insurance
firms collect contributions from many people who face the same risk. A loss claim is paid
out of the total premium collected by the insurance companies, who act as trustees to the
monies. Insurance also provides a safeguard in the case of accidents or a drop in income
after retirement. An accident or disability can be devastating, and an insurance policy can
lend timely support to the family in such times. It also comes as a great help when you
retire, in case no untoward incident happens during the term of the policy. With the entry
of private sector players in insurance, you have a wide range of products and services to
choose from. Further, many of these can be further customized to fit individual/group
specific needs. Considering the amount you have to pay now, it's worth buying some extra
sleep.

Role 3: Life insurance as "Tax planning"

Insurance serves as an excellent tax saving mechanism too. The Government of India
has offered tax incentives to life insurance products in order to facilitate the flow of funds
into productive assets. Under Section 88 of Income Tax Act 1961, an individual is entitled
to a rebate of 20 per cent on the annual premium payable on his/her life and life of his/her
[8]
children or adult children. The rebate is deductible from tax payable by the individual or a
Hindu Undivided Family. This rebate is can be availed upto a maximum of Rs 12,000 on
payment of yearly premium of Rs 60,000. By paying Rs 60,000 a year, you can buy
anything upwards of Rs 10 lakh in sum assured. (Depending upon the age of the insured
and term of the policy) This means that you get an Rs 12,000 tax benefit. The rebate is
deductible from the tax payable by an individual or a Hindu Undivided Family.

Role 4: Life insurance as "Financial Planning"

Most insurance plans available today have a built in savings element. Plans like the
Endowment Plan, Money back Plan, Child Advantage Plan, Preferred Retirement Plans,
etc allow you to meet your dual financial goals of life cover and Savings for the future.
You may avail of a loan from the insurance company against certain plans. Your policy
could also be pledged as a collateral to raise funds from banks and other financial
institutions. In case of your unfortunate death the loans may be repaid from the proceeds
of the life insurance policy. Insurance promotes compulsory savings with regular premium
payments and helps build up a corpus of funds along with financial security for the
dependants in case of premature death. For your medical needs and that of your family.
Hospitalization costs and quality healthcare is becoming increasingly expensive. Without
insurance, you can actually face a situation where you have withdrawn all your money
and borrowed to pay the medical bills. This can be provided with our Critical Illness
Benefit. Insurance provides you the option of covering yourself towards any critical
illnesses that can become extremely costly. Choosing this facility pays you a lump sum
upon diagnosis of certain diseases like cancer, kidney failure, heart attack, stroke,
coronary bypass, vital organ transplants, Alzheimer's disease, paralysis, etc.

Role 5:Role of Insurance as "Economic Development."

It reducing burden of Government in providing relief to the old citizens as well as providing
funds to Govt. for nation building activities. Direct investments made by Insurance serve a
twofold purpose. It acts as a major instrument for the mobilization of savings of people,
particularly from the middle and lower income groups. These savings are channeled into
investments for economic growth thereby creating employment. These savings in turn go
into the task of nation building.

[9]
 Indian regulatory development authority:
In 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted as
an autonomous body to regulate and develop the insurance industry. The IRDA was
incorporated as a statutory body in April, 2000. The key objectives of the IRDA include
promotion of competition so as to enhance customer satisfaction through increased
consumer choice and lower premiums, while ensuring the financial security of the
insurance market. The IRDA opened up the market in August 2000 with the invitation for
application for registrations. Foreign companies were allowed ownership of up to 26%.
The Authority has the power to frame regulations under Section 114A of the Insurance
Act, 1938 and has from 2000 onwards framed various regulations ranging from
registration of companies for carrying on insurance business to protection of
policyholders’ interests.

Composition of Authority
The sec.4 of IRDA Act' 1999, (which was constituted by an act of parliament) specify the
composition of authority, who were appointed by the Government of India. The authority is
a ten-member team consisting of
1. A Chairman
2. Five whole-time members and
3. Four part-time members

Duties, Powers and Functions of Authorities in IRDA

Sec.14 of IRDA Act’, 1999 lays down the duties, powers and functions for the authorities
in IRDA. It is subject to the provisions of this act and any 12 other law for the time being in
force. The authority shall have the duty to regulate, promote and ensure orderly growth of
the insurance business and re-insurance business. The powers and functions of the
authority shall include:
1. Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or
cancel such registration;
[10]
2. Protect the interests of the policy holders in matters concerned with assigning the
policy, nomination by policy holders, insurable interest, settlement of insurance claim,
surrender value of policy and other terms and conditions of contracts of insurance;
3. Specify the requisite qualifications, code of conduct and practical training for insurance
intermediaries and agents;
4. Specify the code of conduct for surveyors and loss assessors;
5. Promote the efficiency in the conduct of insurance business;
6. Promote and regulate professional organizations connected with the insurance and re-
insurance business;
7. Levy the fees and other charges for carrying out the purposes of this act;
8. Control and regulation of the rates, advantages, terms and conditions that may be
offered by insurers in respect of general insurance business not so controlled and
regulated by the Tariff Advisory Committee under sec.64U of the Insurance Act, 1938;
9. Specify the form and manner in which books of account shall be maintained and
statement of accounts shall be rendered by insurers and other insurance intermediaries;
10.Regulate the investment of funds by insurance companies;
11.Regulate the maintenance of margin of solvency;
12.Adjudication of disputes between insurers and intermediaries; 13.Supervise the
functioning of the Tariff Advisory Committee;
14.Specify the percentage of premium income of the insurer to finance schemes for
promoting and regulating professional organizations;
15.Specify the percentage of life insurance business and general insurance business to
be undertaken by the insurer in the rural or social sector; and 16.Exercise such other
powers as may be prescribed.

Growth of Life Insurance in India

Before the private players entered into the market, LIC was the only dominant player in
the public sector. LIC enjoyed over 98% of the market share in the early stage of
[11]
liberalization and private players suffered losses in the first year of their operations. But
LIC’s market share has drastically reduced and now it is nearly 78% and 22% of the
market share has been gained by the private players. It could be seen that the Indian life
insurance industry is an underdeveloped one, as 80% of the Indian population is still not
under the insurance coverage. Therefore, there is ample scope for the 14 growth of the
life insurance sector in India. Previously, customers were insured with public insurance
companies with no flexibility and transparency in the products.
They have visualized the life insurance as a tax saving device only. As the private players
entered, the change has taken place in terms of offering flexibility and transparency.
Customers are looking for new and innovative products and are more interested to take
insurance from private players due to its attractive features and services. Emergence of
Private Insurance Players The Government of India liberalized the insurance sector in
March 2000, which lifted the entry restrictions for private insurance players, allowing
foreign players to enter into the Indian market and start their operations in India. Each
foreign company needs to have a 26% equity capital to enter into the Indian insurance
market. Many foreign companies have joined their hands with the Indian companies and
started their operations in early 2001. Currently there are 26 life insurance companies that
are operating in the private sector.
However, the private insurance companies have three times more products than public
insurance companies. Analysts found that the private insurance players have established
their own identities in the Indian market within a short period of time. India has the world’s
top companies like AIG, New York Life, ING, Lombard, Aviva, MetLife, etc.; competing in
the same market. The private sector players have seen 200% growth in the second year
of liberalization. The current annual growth in 15 the average insurance premium in India
has been 8.2% compared with the global average of 3.4%. Business Strategies Innovative
products, smart marketing, and aggressive distribution have enabled the private insurance
companies to sign up Indian customers faster than expected. To retain their positions and
to stand with the competition, the private players are looking for various methods and are
also following a variety of strategies. The private players are mainly concentrating on
customer service.
For this, they are looking at delivery channels like call centre, internet, telemarketing and
direct marketing. By using these approaches, companies are effectively marketing their
products and providing better service to their customers. Distribution Channels The
[12]
distribution channel is one of the best ways to increase the growth of the insurance
industry. Channels like corporate agents, brokers and banc assurance are playing a
greater role in distribution. The general way of selling insurance products is through
agents and brokers. But the companies are now looking at a new distribution channel
“Work-site marketing”, which is nothing but selling of financial products and other services
to employees through workplace participation and is entirely on a voluntary basis. In this,
the employee has to pay for the products through a payroll deduction. 16 The private
players are looking for alternative channels to market their products as they are facing
difficulty in training new agents with skill sets, which is a time-consuming and costly
activity.
The private players are mainly concentrating on banc assurance model; through this, they
are concentrating on providing the service to rural and semi-urban sector. In the banc
assurance model, the insurance companies have tie-ups with the banks and sell their
products to the bank customers. With the rise in agricultural income, the potential for banc
assurance has increased in smaller cities. So the companies are moving to smaller cities
and towns, which have also increased the growth opportunity for insurance companies.
According to a Fitch report on the insurance sector, the banc assurance channel has
contributed about 20% of the total insurance business in the financial year 2005, whereas
all the alternative distribution channels together have contributed 25-30% of sales in
private insurance companies. These distribution channels include corporate brokers,
internet and corporate agents.

Emergence of Private Insurance Players

The Government of India liberalized the insurance sector in March 2000, which lifted the
entry restrictions for private insurance players, allowing foreign players to enter into the
Indian market and start their operations in India. Each foreign company needs to have a
26% equity capital to enter into the Indian insurance market. Many foreign companies
have joined their hands with the Indian companies and started their operations in early
2001.
Currently there are 26 life insurance companies that are operating in the private sector.
However, the private insurance companies have three times more products than public
insurance companies. Analysts found that the private insurance players have established
their own identities in the Indian market within a short period of time. India has the world’s
[13]
top companies like AIG, Sbi life,New York Life, ING, Lombard, Aviva, MetLife, etc.;
competing in the same market. The private sector players have seen 200% growth in the
second year of liberalization. The current annual growth in 15 the average insurance
premium in India has been 8.2% compared with the global average of 3.4%.
Business Strategies
Innovative products, smart marketing, and aggressive distribution have enabled the
private insurance companies to sign up Indian customers faster than expected. To retain
their positions and to stand with the competition, the private players are looking for
various methods and are also following a variety of strategies. The private players are
mainly concentrating on customer service. For this, they are looking at delivery channels
like callcenters, internet, telemarketing and direct marketing. By using these approaches,
companies are effectively marketing their products and providing better service to their
customers.

Distribution Channels
The distribution channel is one of the best ways to increase the growth of the insurance
industry. Channels like corporate agents, brokers and banc assurance are playing a
greater role in distribution. The general way of selling insurance products is through
agents and brokers. But the companies are now looking at a new distribution channel
“Work-site marketing”, which is nothing but selling of financial products and other services
to employees through workplace participation and is entirely on a voluntary basis. In this,
the employee has to pay for the products through a payroll deduction.

Background of SBI Life Insurance Company

Introduction
Life is full of surprises, some pleasant and some not so pleasant. Our families and we
have to live with these uncertainties. Preparing for the uncertainties of life is what

[14]
Insurance is all about. Insurance is a tool, a solution for delegating the worries concerning
tomorrow onto a trustworthy institution so that you can start living today.
With SBI Life, you could smoothen the rough edges of life; make it a bit easier, so you
needn't worry about your children's education, or your family's future. Whether you are
looking for a safe investment vehicle with good returns or life cover with regular returns in
the future, all it needs is one small action on your part. Leave the rest to us and SBI Life
will take care of your near and dear ones, and most importantly you.
SBI Life Insurance is a joint venture between the State Bank of India and Cardif SA of
France. SBI Life Insurance is registered with an authorised capital of Rs 500 crore and a
paid up capital of Rs 350 crores. SBI owns 74% of the total capital and Cardif the
remaining 26%. SBI Life has already covered more than 8 lacs group lives with an
additional 2.5 lacs lives through individual policies. State Bank of India enjoys the largest
banking franchise in India. Along with its 7 Associate Banks, SBI Group has the unrivalled
strength of over 14,000 branches across the country, the largest in the world.
Cardif is a wholly owned subsidiary of BNP Paribas, which is The Euro Zone‟s leading
Bank. BNP is one of the oldest foreign banks with a presence in India dating back to
1860. It has 9 branches in the metros and other major towns in the country. Cardif is a
vibrant insurance company specializing in personal lines such as long-term savings,
protection products, and creditor insurance. Cardif has also been a pioneer in the art of
selling insurance products through commercial banks in France and 29 more countries.
” SBI Life Insurance’s mission is to emerge as the leading company offering a
comprehensive range of Life Insurance and pension products at competitive prices,
ensuring high standards of customer service and world class operating efficiency. The
company plans to make the insurance buying process quick, simple, and based on well-
informed judgments. In 2004, SBI Life Insurance became the first company amongst
private insurance players to cover 30 lakh lives.
The company expects to carve a niche in the Indian insurance market through extensive
product innovation and aims to provide the highest standards of customer service through
a technological interface. To facilitate this, call centers have been already installed and
help lines will be installed and customers will have access to their accounts through the
Internet or through SBI branches. The company proposes to make available ready

[15]
liquidity to its Life Insurance policies by way of loans at SBI counters. This will make Life
Insurance a liquid asset in the financial portfolio of households.
SBI Life Insurance is uniquely placed as a pioneer to usher bancassurance into India. The
company hopes to extensively utilise the SBI Group as a platform for crossselling
insurance products along with its numerous banking product packages such as housing
loans, personal loans, and credit cards. SBI‟s access to over 100 million accounts
provides a vibrant base to build insurance selling across every region and economic strata
in the country.

In 2007, CRISIL Ltd, a subsidiary of global rating agency Standard & Poor's, gave
company a AAA/Stable/P1+ rating

History
SBI life insurance is Public Limited Listed company. SBI Life Insurance Listed on BSE And
NSE (Stock Exchange of India). SBI Life started as a joint venture with BNP Paribas in
2001. While in its initial stage its business was mainly from bancassurance channel, now
it is developing its own agency team for selling its life insurance products.

Vision Statement
To be the most trusted and preferred life insurance provider

Mission Statement
To emerge as the leading company offering a comprehensive range of life insurance and
pension products at competitive prices, ensuring high standards of customer satisfaction
and world class operating efficiency, and become a model life insurance company in India
in the post liberalization period

Values
 Trustworthiness
 Ambition
 Innovation
 Dynamism
 Excellence

[16]
Reasons to select SBI Life
 Customer Satisfaction - many of their customers who have bought an insurance
policy with them have bought a second one!
 Financially sound with over a 100 years of Banking experience, when people
trusted company with their money, why would they trust somebody else with their
protection needs.
 Affordability
 Easy to buy (accessibility)
 Trust & reliability.

Products Offered by SBI Life

The Life Insurance plans are offered in three categories by SBI Life insurance as per the
customer needs and their base.
1. Individual Plans
2. Group Plans
3. Online Plans

Individual Plans
The SBI Life Insurance plans are designed to carter to the needs of individual customer in
every walk of life. The variant of individual plans are:
1. Unit Linked Plans
2. Child Plans
3. Pension Plans
4. Protection Plans
5. Savings Plans
6. Money Back Plans

SBI Life Unit-linked Insurance Plans

SBI Unit-linked insurance policies are long-term protection cum investment plans that
provide customers a chance to avail market linked returns and offers life insurance
protection at the same time. Based on the risk appetite of a customer, there are a number
of funds to choose from.
[17]
SBI Life Insurance Child Plans
Planning for the future of your child at an early stage in their lives can leave you with
plenty of benefits as they start to come of age. SBI Life has made available two
comprehensive child insurance policies that are cut out to provide extensive benefits over
time.

SBI Life Insurance Pension Plans

SBI Life Insurance retirement plans to its customers so that everyone is prepared for life
after their working age. Retirement plans provide monthly payments to individuals in the
form of pension so that they can carry on with things without depending on anyone for
financial support.

SBI Life Protection/ Term Insurance Plans

SBI Term insurance plans are low-cost insurance policies that are designed with a view to
offer full financial stability and protection to the family of an individual in case of his / her
unfortunate demise.

SBI Life Insurance Savings Plans

In case you have future plans for yourself or for your family, planning in advance can help
you in the long run, and SBI Life has made available several savings plan to help
individuals save money for the future, whether it is for the education or marriage of their
children, purchasing your dream home, or just taking off on a long vacation.
Money Back Plan
Introducing SBI Life Money Back plan, a smooth way to plan for all the special moments
in your life. As an individual your life is fueled by dreams. You experience different special
moments in life like wedding, birth of a child, child‟s education, or purchasing a new
home. You have to be financially prepared for these special moments. What you need is
easy liquidity at regular intervals with life insurance protection to take care of these special
moments.
SBI Life Money Back is a saving plan with added advantage of life cover and cash inflow
at regular intervals. This plan is designed for individuals who want to plan for various
financial obligations at specified times in life.

Group Plans
SBI Life provides a number of group insurance plans which aid organisations and
companies in rewarding, retaining and encouraging their best employees while also
[18]
offering a variety of corporate solutions to meet the voluntary and statutory requirements
of employers, thereby strengthening the relationship between employees and employers.
Following are the group plans you can avail :
1. Group Retirement Plan
2. Group Protection Plan
3. Group Loan Protection Plan
4. Group Micro Insurance Plan

SBI Life Group Retirement Plans

The group retirement plans offered by SBI Life are designed in a manner such that they
offer financial stability as well as security to the family of an employee, thereby ensuring
that the workforce of an organisation remains motivated and loyal. These policies
safeguard funds that can be used at a later date to meet the obligations of your
organisation on gratuity, annuity / pension, leave encashment and superannuation

SBI Life Group Protection Plans

The group protection plans offered by SBI Life provide pure protection cover for the
employees of a company to ensure the financial security of their families in case of
unfortunate and unforeseen circumstances.

SBI Life Group Loan Protection Plans

The group loan protection plans made available by SBI Life are affordable policies that
provide significant help in sharing the burden of your liabilities. There is only one group
protection plan offered by the company.

SBI Life Group Micro Insurance Plans

The group micro insurance plans designed by SBI Life are ideal for customers with low
household income and small savings.
Online Plan
SBI Life Insurance offers a state of the art online platform to enrol into various life
insurance plans. Plans which are available online are
 SBI Life- eShield
 SBI Life- eWealth Insurance
 Life- Annuity Plus

[19]
 2.Project Proposed

Research Project Title:- “Alternate Mode Penetration In Retail Agency Channel

For SBI Life”
Name of the organisation :- SBI Life Insurance Company Ltd.
Name of the Student :- SHIPRA GUPTA
Company :- SBI Life Insurance Company (Processing Centre Lucknow)
Research Area:- Lucknow

[20]
Introduction:-
Premium
Most of us know that a premium is the price paid for buying an insurance policy but
several premiums related aspects are less well understood.
Insurance is a contract between the insurance company and the life assured and every
contract to be enforceable under law must involve a valid consideration. In this case,
premium is the consideration which makes the contract complete.
An insurance premium is generally expressed as premium per thousand rupees of sum
assured and is illustrated in the form of tables of premium rates by insurance plans, policy
terms, sum assured and the age of the proposer. Periodicity or mode of premium payment
depends on the type of policy chosen and also on the payment option that the policy
offers.

[21]
Premium is required to be paid in advance and can be paid via cash up to Rs. 50000, (the
limit set by IRDA for cash payments) cheque or DD.

Renewal Premium
Introduction
One can never take life for granted. From being taught not to touch the hot stove to
looking left and right before crossing the road, we inculcated a lot of measures to keep
ourselves and our loved ones protected. One such precaution we undertook was to
purchase a life insurance policy. A contract where the insurer promises to insure your
nominees with a death-benefit in exchange for premium payments.

Today, it is imperative to own life insurance. It could be a term plan or a money back
policy, or even an Ulip; the heart of the matter is: own one. Now, while buying one is
important, life insurance renewal is important as well. Yes, failing to renew your insurance
on time is a loss you should not suffer.

Renewal premiums are the subsequent premiums that are paid by the insured to the
insurer in order to keep the policy in operation and avail the benefits of the policy
accordingly.
If a policy holder fails to pay the premiums, then his policy lapses after a grace period.
The renewal premiums are paid after the initial premium and are indispensable for the
continuation of the policy.
Importance Of Renewal Premium
As buying an insurance policy is important, its renewal is also considered very important
and failing to renew the premium is a loss one should never suffer. The reasons will help
illustrate the point better.

1. Defeats the Purpose of Insurance

If you fail to renew your plan on time, your insurance will not stand and if something
happens to you during that time, your family will not receive the stipulated lump-sum
benefit.

[22]
You buy insurance to keep your loved ones safe. From paying the premium amounts to
selecting the sum insured, you put in a lot of effort thinking and researching before
zeroing down on a particular plan. Do not waste it by forgetting to renew policy.

2. It is expensive
When you buy a life insurance policy, you pay the insurer a regular amount called
premium. Many factors such as your age, height, medical history, and income are taken
into consideration before zeroing in on your premium amount.

If your policy terminates due to non-renewal, you lose the premium benefits. While you
can renew the policy at a later stage, it is expensive and can involve you paying interest
as well. Do not suffer a financial setback by failing to renew your policy.

3. You lose out on Tax Benefits

While insurance is one of the best ways to secure your family’s financial future in your
absence, it offers you tax benefits as well which are quite handy each year when you file
your tax returns.

Everybody loves tax benefits. You get to save money which you can put into the bank on
your go on that shopping spree you so wanted to go on.

Having insurance, especially the one for your life and health, is one of adult life’s
hallmarks. It is a sign that you care for yourself and your loved ones and take steps to
secure their future. Renewing your insurance is not a long process, there is an online life
insurance renewal—it is quick and simple. Do not miss out on renewing your insurance,
after all, precaution is better than cure.

Insure your loved one’s financial future after you with term insurance.

[23]
 Methods of Paying Renewal Premium

Pay Online/Auto Debit

Pay By Phone

Pay Through SBI/SBI Life Branches

Pay By Cash
[24]
1. Pay Online/Auto Debit

 Net Banking-

If you are an internet banking customer of State Bank of India or any of our partner
banks, you can enjoy the convenience of online payments.

All you have to do is add SBI Life as your biller (SBI Life is listed as a national biller)
and provide your Policy details. Alternatively, you can register through
www.billdesk.com.

After verification, this service will be activated and a premium due advice will be sent to
your banker. The premium bill will be displayed once you login, indicating the due date
and the premium due.

You can choose to pay the premium immediately or schedule the payment for a
convenient date before the premium due date.

 Direct Debit Facility-

Direct debit facility is another facility which enables the auto debit of premium from
your bank account on your due date. The Direct debit facility is available to the account
holders of Axis Bank, CITI Bank, ICICI Bank, Bank of Baroda, Union Bank of India,
State Bank of India, Bank of India, IndusInd Bank, Punjab National Bank and Kotak
Bank. To avail this facility, please submit the duly filled Direct Debit Mandate form
along with a cancelled cheque. You can submit this mandate at any of our branch
offices or mail it to our communication address.

 Electronic Clearing Service(ECS) Mandate-

Auto debit through ECS is a facility through which premiums will be debited to your
bank account automatically. This facility is currently available in 87 locations. Policy
holders having a bank account in these locations and participating in the clearing
house operations can register for this facility by submitting the ECS Mandate form
along with a cancelled cheque in which the MICR number is mentioned.

Standing Instructions On your Credit Card-

[25]
 SBI Life customers having a valid VISA or Master credit card can register for auto debit
of SBI Life premiums by issuing a Standing Instruction. To register for this facility,
please fill the Credit Card Mandate Form and forward the same along with the self
attested photo copy of your credit card to your nearest SBI Life branch offices

2. Pay By Phone
 SBI Life Easy Access Mobile Application-
• Download Mobile Application SBI Life Easy Access
• Open the application, Click on the tab Pay Your Renewal Premium
• Enter your Policy Number, Date of Birth and Email and pay premium through net
banking/Credit Card * /Debit Card (Email ID will be used to send you the payment
acknowledgement)
 SBI Mobile Banking
• Download (SBI Freedom) SBI's Mobile Application
• Login and go to M-Commerce >> Select SBI Life and enter your Policy Number, Date
of Birth, Amount and make payments
 Mobile Wallets - SBI Buddy
• Download State Bank App on your mobile "Buddy"
• Click "Recharge & Bill Pay" & go to "Bill Pay" option
• Select Biller Category as "Insurance" and choose "SBI Life Insurance" as biller
• Enter Policy number & Date of Birth and complete the transaction
3. PAY THROUGH SBI / SBI LIFE BRANCHES
 Electronic Fund Transfer (EFT)
Available at all SBI and SBI Group branches
• Premiums can be paid in cash^ (upto ` 49,999/-) or through State Bank cheque or direct
debit
 SBI ATMs and Kiosks
Pay through State Bank Group ATMs and Kiosks
• Insert Your Card
[26]
• Go to Services >> Bill Pay >> Select SBI Life Insurance
• Enter Policy Number and Date of Birth
• Make Payments Electronic Fund Transfer (EFT) SBI ATMs and Kiosks
 Point of Sales (PoS) terminals at select SBI Life branches
Another easy renewal premium payment option is paying through Debit Card (Maestro) /
Credit Card (VISA and Master) using POS (Point of Sales) terminals at select SBI Life
branches. Currently this facility is available in 204 locations.
4. Pay By Cash
 Common Service Centers (CSC)
• Policy Holders can pay premium in cash^ ( Upto ` 49,999/-) through any of Common
Services Centers (CSC) across India.

Alternate Mode
Introduction-
If remembering your premium due date has been difficult, you may choose the alternate
mode(auto debit facility). Under this system, you may either set up a direct debit or get it
done through the electronic clearance system(ECS) mandate.
By doing this, you provide auto debit instruction to the bank, your bank A/C gets debited
automaticallyand money gets transferred to the insurer. You can avail this facility by
submitting a filled-up mandate form along with a cancelled cheque at any of branches of
the insurer.
Before applying for this, check if such a facility is enabled with your bank, Some insurers
offer such facilities only at the inception of the policy.
Alternate mode can be applied to policies in the following ways:-
Auto debit through NACH
You can choose to make use of the auto debit facility through National Automated
Clearing House (NACH). For activating this, you need to submit the following documents
at the nearest SBI Life branch office:
• A duly filled Mandate form
• Proof of Bank Account (cancelled cheque/account statement)
[27]
About NACH - National Payments Corporation of India (NPCI) has implemented “National
Automated Clearing House (NACH)” for Banks, Financial Institutions, Corporates and
Government. It is a web based solution to facilitate interbank, high volume, electronic
transactions which are repetitive and periodic in nature.

*All the banks in India come under the purview of NACH w.e.f. 01-April-2016 as per NPCI
and RBI instructions. Thus NACH replaces the current ECS (Electronic Clearance
System) system of auto debit.

Direct debit from Bank Account

You can set up auto debit of premium from your bank account on your due date.
The direct debit facility is available to the account holders of State Bank of India, Axis
Bank, CITI Bank, ICICI Bank, Bank of Baroda, Union Bank of India, Bank of India,
IndusInd Bank, Punjab National Bank and Kotak Bank.

To avail this facility, please submit the following documents at any of our branch offices or
mail it to our communication address.
• A duly filled Mandate form
• A cancelled cheque

[28]
 Objective Of the Project
 The project is based on the topic Alternate Mode Penetration In retail Agency
Channel for SBI Life and the objective of the project is to do detailed study and find
out the reasons why Alternate mode of premium payment not implemented to all the
policies of SBI Life.
 The reasons will be studied at two level:-
 At Organisation Level- Reasons for Rejection of Mandate form by the
Organisation
 At Customer Level- Reasons for not adopting the Alternate Mode of Premium
Payment.
 And Suggest ways to overcome these Shortcomings so that the policies with
premium payment through Alternate mode can be increased.

[29]
 Methodology
Research Type
Research is totally based on primary data. Secondary data can be used only for the
reference. Research has been done by primary data collection, and primary data has
been collected by meeting with the customers at branch and through telephonic
conversation. Data collection has been done by giving structured Questionnaire.This
study will be based on judgment sampling and this research is skewed to organization
level. This is a Descriptive type of research.
Sampling
Sample size has been taken by judgment sampling. Judgment sampling is a process in
which the selection of a unit, from the population is based on the pre judgment. This
research requires the survey of policyholders of SBI Life to figure out the reasons for non-
adoption of Alternate mode of premium payment. So research concentrates on the
policyholders of the company for its study purpose. So the selection of unit for this
research has been judged by the researcher. Sample size for this research is at
Organisational Level is 600 and at customer level it is 150

Type Of Data Collection:- Primary and Secondary

Method Of Data Collection:- Survey
Period of Study:- 1.5 Months
Sampling Type:- Non-Probability Sampling
Collection Instrument:- Questionnaire
Data Analysis Tool:- M.S Excel

3.Findings And Interpretation

[30]
The Findings of the report are derived in two phases i.e. the reasons for rejection of ECS
Mandate at Organisation Level (Fresh Mandate as well as for Existing Mandate) And
Reasons for not applying for the Alternate Mode of Premium payment by the policyholder.

 Reason for Rejection Of ECS Mandate At Organisational

Level
The findings and interpretations are derived by analysing 600 data in all. Among which
500 data is of already registered mandate and 100 data of fresh mandate. And while
doing the analysis out of 1000 mandate forms 100 forms came under rejection due to
these following reasons.

For Already Registered Mandate

300

250

200

150

100

50

0
h le d n k h h h h te h h n e n h n h
atc l a b cate gi ve Ba n atc atc atc atc nda atc ra nc i tio equ Gi ve atc Gi ve atc
m a i nti m sm sm sm a m B nd Ch t i s m t i s m
is ot by i s i i i is
. M t Av the e N ted e M s M e M e M I n M e M by Co nd e No e m o No e M
o o Au ur s d d r at e ed ed a d m N at
nt N re N ot nat ate Co or l os u t D a bl Na m l ow a g date Co na unt d D
u u N i g ot SC n W r l l m C
c co cl os ate S n I F ti Enc Sta va i a nk s fo da a n I FS PH cco En
A in n m A
A En nd on ou
n
ot
B es
a s si m N roc und ch i
M e o
in pr A
yN e p Fo at
on Im i c p l et ate i s m
b l d M
ati Po m
co Ma n ure
l ter h um n
A T I t
na
iS g

Interpretation:-
The most common reasons for the rejection of the ECS Mandate which was found out in conducting
the analysis were-

 The Mismatch in the IFSC Code mentioned in the mandate form with the Account Proof
attached with it which is essential for the process.
[31]
 The Mismatch in the Account No. being mentioned in the form with the Account proof attached
with it.

 Signature not done in the form and

 The Mismatch in the Start Date of the Policy mentioned in the form with the actual date of
enforcement of the policy.

For Fresh mandate

20
18
16
14
12
10
8
6
4
2
0
n h t e o of of fo g e g
tio atc o un a ps lN ro ro In s in a m i tin
c m L a P P e s N r
je is Am l s t t et i
er w
Re M m i ca o po oun oun pl fM l d der
te u n r c c m o
da No i
ec
h gP Ac c co Pr
o ho fU
n
an nt rem T on t h O fA In n t l i cy o
u tP r i u e
m
cc
o
en W rw ag
e co Po tim
esh A c i e m A c nd t
Fr ld I a a
or s uf y ho l ur a lid N o. ted
F In ic B V c
s ol un
t je
s on p co y Re
Re
a he Ac lic
oft In Po
e h
na
m atc
m
In is
c h M
at
m
is
M

Interpretation:-
After the study the common reasons that was arrived at for the rejection of the
mandate form are-

 The Account Proof provided by the policyholder does not match with the one
mentioned in the mandate form.

 And most of the mandate forms were rejected on the ground of non -availability of
Valid Account proof with the form which is mandatory for the process to take place.

[32]
  Another reason which was common for rejection was the rejection of the policy itself
at the time of Underwriting because of which the mandate form has to be rejected.

 Reasons Why Policyholder Do not Opt For Alternate Mode

Of Premium Payment
The analysis for this purpose was done by conducting a survey with the help of a
questionnaire and 150 customers of SBI Life were contacted and their responses were
recorded to find out the Main Reasons for the same and to derive the suggestion and
conclusion from it.

The following are the findings from the Questionnaire:-

Are you satisfied with SBI Life policies and plans?

a)Yes
b)No
Count of Policyholder
Row Labels Name
a 118
b 32
Grand Total 150

Total
a b

21.33%

78.67%

[33]
 Interpretation-
SBI Life is one the top and trusted insurance company and is providing best services to
its policyholder and 79% of the customers are very satisfied with the policies and
services of SBI Life.

Were you aware about the policy premiums to be paid ?

a)Yes
b)No
Count of Policyholder
Row Labels Name
a 138
b 12
Grand Total 150

Total
a b

8.00%

92.00%

Interpretation
Almost all the customers were aware about the premium amount to be paid to keep the
policy inforced.

Which method of premium payment you opted for?

a)Cash
b)Cheque
c) Net Banking
[34]
 d)Others
Count of Policyholder
Row Labels Name
a 21
b 82
c 32
d 15
Grand Total 150

Total
90
80 82
70
60
Total
50
40
30 32
20
21
10 15
0
a b c d

Interpretation-
Maximum of the policyholders pay renewal premium by cheque because they find it the
simplest and safest mode of premium payment.

Were you told about Alternate mode of premium payment by

the concerned person (Agent/Sales Person)
a)Yes
b)No
Count of Policyholder
Row Labels Name
a 128
b 22
Grand Total 150

[35]
 Total
a b

14.67%

85.33%

Interpretation-
At the time of selling the policy itself the customers were told about the Alternate mode of
premium payment but only in few cases it was not discussed.

Was the person effective in explaining you the benefits of

Alternate mode?
a)Yes
b)No
Count of Policyholder
Row Labels Name
a 57
b 93
Grand Total 150

[36]
 Total
100
90 93
80
70
60 Total
50 57
40
30
20
10
0
a b

Interpretation-
While conducting the survey it was found that most of the time the concerned person was
not as effective in explaining the process and the benefits of alternate mode to
customers.

Did you find the Alternate mode of premium payment

Beneficial for you?
a)Yes
b)No
c) Indifferent
Count of Policyholder
Row Labels Name
a 45
b 65
c 40
Grand Total 150

[37]
 Total
a b c

26.67% 30.00%

43.33%

Interpretation-
The customers who use net banking mode of renewal premium payment or
prefer offline modes do not find the auto debit mode beneficial to them
because they prefer making payment themselves when the premium becomes
due.

Would you like to Opt for Alternate Mode of Premium

payment?
a)Yes
b)No
c) Maybe
Count of Policyholder
Row Labels Name
a 33
b 67
c 50
Grand Total 150 Interpretation-
As 45% policyholders have opted for Maybe option so there are chances for
them to choose alternate mode for future premium payment but they need to be
made aware of all the benefits they are going to get by choosing this mode of
premium payment.

[38]
Why have you not opted for Alternate mode of premium
payment?
a)You were unaware about it
b)You do not prefer using online modes of payment
c) You had a bad experience in the past
d)Others
Count of Policyholder
Row Labels Name
a 56
b 34
c 9
d 51
Grand Total 150

Total
60
56
50
51
40
Total
30 34

20

10
9
0
a b c d

Interpretation-
Two of the most common reasons of not opting for Alternate mode are-
The unawareness among the policyholder about how the mode works and how it
is benefited to them and the unwillingness to opt for it for number of reasons.

Have you ever had a policy with auto debit facility earlier?
a)Yes
[39]
 b)No

Count of Policyholder
Row Labels Name
a 9
b 141
Grand Total 150

Total
Total
160
141
140
120
100
80
60
40
20 9
0
a b

Interpretation-
Maximum of them never had a policy with auto debit mode.
Would you recommend others to opt for Alternate mode?
a)Yes
b)No
Count of Policyholder
Row Labels Name
a 80
b 70
Grand Total 150

[40]
 Total
82
80
80
78
76
Total
74
72
70
70
68
66
64
a b

Interpretation-
After explaining the benefits and the process of auto debit mode to the
policyholder it was found that 80 of them will recommend others to opt for it and
70 will not.

[41]
 4.Suggestion

The Alternate mode of premium payment is not so popular among the policyholders since
there are number of reasons responsible for the same but these can be resolved if
properly taken care of. Based on my study there are few suggestions that might be useful
for the organisation to register all the policies under Alternate Mode of Premium Payment.
 Create Awareness- At the time of selling the policy only the policyholder must
be told briefly about the alternate mode of premium payment as well as the benefits
that the policyholder will have in adopting for the same.
 An Option in the proposal form itself- Another way to increase the
alternate mode is by giving an option in the Online Proposal form itself so that at the
time of the proposal only the policyholder can opt for auto debit mode and no
additional process would be required and with the acceptance of the proposal the
alternate mode can easily be applied to the policy, saving the time of both the
parties.
 Register Mandate to the Earliest Possible- The organisation must try to
register the mandate as soon as the policyholder applies for the same because the
delay in registering the mandate form might lead to cases of technical lapses and
rejection of the mandate form after the expiry of the start date for the policy.

[42]
  Minimize Rejection- Another common reason for not applying of alternate
mode is the rejection of the mandate form during the process of its registration and
this problem can be resolved if the mandate form is cross checked immediately and
all the details are properly matched with the account proof.
 Inflated Premium Amount- The amount to be mentioned in the mandate form
should compulsory be the inflated one, this must be so because premiums are paid
for a longer period of time say 5-10 years and government taxes keeps on changing
with the passage of time and if the actual amount of premium is mentioned in the
form and it is registered with the same amount than when there will be hike in taxes
by government the premium amount will automatically increase and it that case the
auto debit mode would not work and policy might lapse because of non payment of
the premium amount.

5.Conclusion
Todays’ scenario has completely changed and so are the lives and lifestyles of the
peoples and they want to secure the future of their family and themself and for the same
purpose they choose to take a policy on their life according to the plan that suits them the
best and for getting indemnified against the loss they need to pay a consideration in return
to the insurance company (insurer) who can make the loss good and this premium is to
paid regularly for a fixed period of time.
The people these days are so busy in their fast running lives that most of the time they
forget to make regular and timely payment and this might lead to lapsation of policy due to
non payment of regular premium.
As the policy is being purchased by the people just to cover the risk of life and in order to
continue the benefits of the policy and be indemnified against the loss the policyholder is
supposed to pay the renewal premium amount regularly and if they fails to make the
payment on time than the policy will lapse and they will not receive the benefits from the
policy in future and this is a loss to the policyholder as all the paid premium gets forfeited
and even if the policyholder revives the lapsed policy then too he need to pay the interest
on unpaid premium plus the premium amount to revive the policy, which can be a costly
affair for the policyholder.

[43]
On the other hand if the premium amount is not paid on time the organization also suffers
because this amount of premium is used by the organization to pay the claims and meet
out all its expenses and it also affects the earning and profitability of the organization.
So in order to avoid the chances of non- payment of renewal premium amount on time,
one of the best mode of premium payment is Alternate mode which means that on the
date the premium becomes due it is automatically deducted from the account which is
linked to the policy thus avoiding any non-payment and saving the time and energy of
both the parties i.e. the insurance company (insurer) and the policyholder (insured).
But as this is quite new concept and people hesitate to share their bank details or allow
the organization to put auto debit to their account and most of the times its the
unawareness or they do not prefer using online modes of premium payment so it
becomes difficult on the part of the organization to convince the policyholder so that they
choose the alternate mode of premium payment.
While my survey with SBI Life policyholders I had got the opportunity to contact 150
customers to get their opinion on Alternate mode of premium and the analysis of my
research report can be concluded with the following points-

 Most of policyholders prefer offline mode of premium payment over online mode of
premium payment as most of them pay premium through cheque because they find it
safe and secure mode of making payment.
 They are not fully aware about the benefits of the alternate mode and they were not
effectively guided that why should they opt for this mode and how they can be benefited
from it.
 Some of the policyholder choose net banking over auto debit mode because they
find it more comfortable and they prefer making payment on their own when the policy
premium becomes due.
 In certain cases the policyholder applies for the alternate mode but it is rejected at
organization level because of certain reason which are
 Mismatch in account number given in form with the account proof attached
 IFSC code mismatch
 Signature of the policyholder not done on the form
 Valid account proof missing
 Wrong proposal number mentioned in the form
 Policies which got rejected at the time of underwriting
 Start date mentioned in the form does not match with the one mentioned in the
system
All of the reasons mentioned above can be overcome if the mandate forms are cross
checked at the time they are filled by the policyholder because this will avoid the chances

[44]
of rejection of the mandate form at organisation level and more of the policies can be
registered with auto debit mode.

6.Annexure
Questionnaire
Name-
Age-
Gender-
Occupation-
1) Are you satisfied with SBI Life policies and plans?
c) Yes
d) No
2) Were you aware about the policy premiums to be paid ?
[45]
 c) Yes
d) No
3) Which method of premium payment you opted for?
e) Cash
f) Cheque
g) Net Banking
h) Others
4) Were you told about Alternate mode of premium payment by
the concerned person (Agent/Sales Person)
c) Yes
d) No
5) Was the person effective in explaining you the benefits of Alternate
mode?
c) Yes
d) No
6) Did you find the Alternate mode of premium payment Beneficial for
you?
d) Yes
e) No
f) Indifferent
7) Would you like to Opt for Alternate Mode of Premium payment?
d) Yes
e) No
f) Maybe

[46]
8) Why have you not opted for Alternate mode of premium payment?
e) You were unaware about it
f) You do not prefer using online modes of payment
g) You had a bad experience in the past
h) Others
9) Have you ever had a policy with auto debit facility earlier?
c) Yes
d) No
10) Was the experience of alternate mode satisfactory?
a) Yes
b) No
c) Indifferent
11) Were premium deduction by Alternate mode done on time?
a) Yes
b) No
12) Would you recommend others to opt for Alternate mode?
c) Yes
d) No

[47]
 7.Bibliography
Websites
 www.sbilife.co.in (SBI life Official Site)
 www.irda.gov.in (IRDA Website)
 Investopedia.com
 www.scribd.com

[48]