Comparative Study of

potentiality of
metlife insurence in india

The University of Burdwan

Submited by:- Kazi Abu Zafar Md. Yasin

Roll Number:- 24

Centre for Management Studies.

The University Of Burdwan

Acknowledgement
I owe a loads of thanks to the persons who helped and supported me during the writing of this
project report. My deepest thanks to Prof. Devmalya Dutta and Dr. Pradip Mallik the Guide
of the project for guiding and correcting various documents of mine with attention and care.
He has taken pain to go through the project and make necessary correction as and when
needed.
I express my thanks to the Director of,Centor for Managemnt Studies, Prof. Dilip Roy for
extending his support.
My deep sense of gratitude to Mr. Shivendra Sharma, Branch Manager, Metlife Insurance, and
Mr. Kaushik Paul, Sales Manager, Metlife Insurance, support and guidance. Thanks and
appreciation to the helpful people Metlife Insurance, Shakespear Sarani , Kolkata- 17, for their
support.
I would also thank my Institution and my faculty members without whom this project would
have been a distant reality. I also extend my heartfelt thanks to my family and well wishers.

Date:- 17th July, 2010. KAZI ABU ZAFAR MD. YASIN

Introduction
What is Life Insurance?What is Life Insurance and a Life Insurance Company? Can a Life
Insurance Company Help Me?

Find out below:

Life Insurance is insurance for you and your family's peace of mind. Life insurance is a
policy that people buy from a life insurance company, which can be the basis of
protection and financial stability after one's death. Its function is to help beneficiaries
financially after the owner of the policy dies.

It can also be a form of savings in the long run if you purchase a plan, which offers the
option of contributing regularly. Additionally, a little known function of life insurance is
that it can be tied in with a person's pension plan. A person can make contributions to a
pension that is funded by a life insurance company. These are considered private
pension arrangements.

In addition, you should also make a list of what you feel needs to be protected in your
family's way of life. With a life insurance policy in place, you can:-

provide security for your family

protect your home mortgage

take care of your estate planning needs

look at other retirement savings/income vehicles

HISTORY & DEVELOPMENT OF LIFE INSURANCE IN INDIA…

The history of general insurance dates back to the Industrial Revolution in the west
and the consequent growth of sea-faring trade and commerce in the 17th century. It
came to India as a legacy of British occupation. General Insurance in India has its roots
in the establishment of Triton Insurance Company Ltd., in the year 1850 in Calcutta by
the British. In 1907, the Indian Mercantile Insurance Ltd, was set up. This was the first
company to transact all classes of general insurance business.

1957 saw the formation of the General Insurance Council, a wing of the Insurance
Associaton of India. The General Insurance Council framed a code of conduct for
ensuring fair conduct and sound business practices.

In 1968, the Insurance Act was amended to regulate investments and set minimum
solvency margins. The Tariff Advisory Committee was also set up then.

In 1972 with the passing of the General Insurance Business (Nationalisation) Act,
general insurance business was nationalized with effect from 1st January, 1973. 107
insurers were amalgamated and grouped into four companies, namely National
Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance
Company Ltd and the United India Insurance Company Ltd. The General Insurance
Corporation of India was incorporated as a company in 1971 and it commence business
on January 1sst 1973.

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 This millennium has seen insurance come a full circle in a journey extending to nearly
200 years. The process of re-opening of the sector had begun in the early 1990s and the
last decade and more has seen it been opened up substantially. In 1993, the
Government set up a committee under the chairmanship of RN Malhotra, former
Governor of RBI, to propose recommendations for reforms in the insurance sector.The
objective was to complement the reforms initiated in the financial sector. The committee
submitted its report in 1994 wherein , among other things, it recommended that the
private sector be permitted to enter the insurance industry. They stated that foreign
companies be allowed to enter by floating Indian companies, preferably a joint venture
with Indian partners.

Following the recommendations of the Malhotra Committee report, 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.

In December, 2000, the subsidiaries of the General Insurance Corporation of India

were restructured as independent companies and at the same time GIC was converted
into a national re-insurer. Parliament passed a bill de-linking the four subsidiaries from
GIC in July, 2002.

Today there are 14 general insurance companies including the ECGC and Agriculture
Insurance Corporation of India and 14 life insurance companies operating in the country.

The insurance sector is a colossal one and is growing at a speedy rate of 15-20%.
Together with banking services, insurance services add about 7% to the country’s GDP.
A well-developed and evolved insurance sector is a boon for economic development as it
provides long- term funds for infrastructure development at the same time
strengthening the risk taking ability of the country.

Some of the important milestones in the life insurance business in India are:

1818: Oriental Life Insurance Company, the first life insurance company on Indian soil
started functioning.

1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company
started its business.

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate
the life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the government to collect
statistical information about both life and non-life insurance businesses.

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 are taken over by the
central government and nationalised. LIC formed by an Act of Parliament, viz. LIC Act,
1956, with a capital contribution of Rs. 5 crore from the Government of India.

The General insurance business in India, on the other hand, can trace its roots to the
Triton Insurance Company Ltd., the first general insurance company established in the
year 1850 in Calcutta by the British.

Some of the important milestones in the general insurance business in

India are:

1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all
classes of general insurance business.

1957: General Insurance Council, a wing of the Insurance Association of India, frames a
code of conduct for ensuring fair conduct and sound business practices.

1968: The Insurance Act amended to regulate investments and set minimum solvency
margins and the Tariff Advisory Committee set up.

1972: The General Insurance Business (Nationalisation) Act, 1972 nationalised the

general insurance business in India with effect from 1st January 1973.

107 insurers amalgamated and grouped into four companies viz. the National

Insurance Company Ltd., the New India Assurance Company Ltd., the

Oriental Insurance Company Ltd. and the United India Insurance Company

Ltd. GIC incorporated as a company.

List of insurance companies currently operating in india

LIFE INSURANCE COMPANIES

Sl. No. Insurers Foreign Partners Regn. Date of Year of

No. Registration Operation

1. HDFC Standard Life Standard Life 101 23.10.2000 2000-01

Insurance Co. Ltd. Assurance, UK

2. Max New York Life New York Life, USA 104 15.11.2000 2000-01
Insurance Co. Ltd.

3. ICICI-Prudential Life Prudential , UK 105 24.11.2000 2000-01

Insurance Co. Ltd.

4. Om Kotak Life Insurance Old Mutual, South 107 10.01.2001 2001-02

Co. Ltd. Africa

5. Birla Sun Life Insurance Sun Life, Canada 109 31.01.2001 2000-01
Sl. No. Insurers Foreign Partners Regn. Date of Year of
No. Registration Operation

Co. Ltd.

6. Tata-AIG Life Insurance American International 110 12.02.2001 2000-01

Co. Ltd. Assurance Co., USA

7. SBI Life Insurance Co. BNP Paribas 111 29.03.2001 2001-02

Ltd. Assurance SA, France

8. ING Vysya Life ING Insurance 114 02.08.2001 2001-02

Insurance Co. Ltd. International B.V.,
Netherlands

9. Allianz Bajaj Life Allianz, Germany 116 03.08.2001 2001-02

Insurance Co. Ltd.

10. Metlife India Insurance Metlife International 117 06.08.2001 2001-02

Co. Ltd. Holdings Ltd., USA

11. Reliance Life Insurance --- 121 03.01.2002 2001-02

Co. Ltd. (Earlier AMP
Sanmar Life Insurance
Co. from 3.1.2002 to
29.9.2005)

12. AVIVA Aviva International 122 14.05.2002 2002-03

Holdings Ltd., UK

13. Sahara Life Insurance --- 127 06.02.2004 2004-05

Co. Ltd.

14. Shriram Life Insurance Sanlam, South Africa 128 17.11.2005 2005-06
Co. Ltd.

15. Bharti AXA Life AXA Holdings, France 130 14.07.2006 2006-07
Insurance Co. Ltd.

16. Future Generali India Generali, Italy 133 04.09.2007 2007-08

Life Insurance Company
Ltd.

17. IDBI Fortis Life Fortis, Netherlands 135 19.12.2007 2007-08

Insurance Company Ltd.

18. Canara HSBC OBC Life HSBC, UK 136 08.05.2008 2008-09

Insurance Company Ltd.

19. Aegon Religare Life Religare, Netherlands 138 27.06.2008 2008-09

Insurance Company Ltd.

20. DLF Pramerica Life Prudential of America, 140 27.06.2008 2008-09

Insurance Co. Ltd. USA

21. Star Union Dai-ichi Dai-ichi Mutual Life 142 26.12.2008 2008-09
Insurance, Japan
Sl. No. Insurers Foreign Partners Regn. Date of Year of
No. Registration Operation

22. IndiaFirst life insurance Legal & General 143 05.11.2009 2009-10
company Middle East Limited,
UK

23. Life Insurance --- 512 01.09.1956 1956-57

Corporation of India

Recent trends in the insurance industry in india

A year of regulatory tightening for the insurance industry

The most notable changes were the ones that had policyholder interests in mind — a cap
on the expenses of the popular unit-linked insurance plans and allowing life insurers to
sell products online.

2009 was a year in which regulators ushered in quite a few changes and proposed as
many, for the insurance industry. The most notable changes were the ones that had
policyholder interests in mind — a cap on the expenses of the popular unit-linked
insurance plans and allowing life insurers to sell products online.

Apart from regulations which have already passed into law, there are others in the
proposal stage — such as the Swarup Committee recommendations and the Direct Taxes
Code — which may have far reaching implications for players. Here's a look at the
changes suggested, implemented and their impact on the industry.

Cap on ULIP expenses

Unit-linked insurance plans (ULIPs) have been long criticised for their high front-end
charges, compared to alternative investments such as mutual funds; which depressed
the yield to the investor.

It was to address this issue that the Insurance Regulatory Development Authority
introduced an upper ceiling on ULIP charges. This cap is expressed in terms of difference
between the gross and net yield to customers.

For ULIPs up to 10 years, the yield difference is capped at 300 basis points, and for those
running over 10 years, it should not exceed 225 basis points.

Apart from this, the regulator has also imposed a cap on fund management charges at
1.35 per cent annually, within the overall cap, for all products.

Insurance companies voiced their reservation on including the mortality and morbidity
charges in the overall cap and upon the representation, IRDA removed these charges
from the purview of the cap on expenses.

The new regulation came into effect from October 1 for new products and existing ULIPs
are required to meet these criteria by December 31. Responding to this change, a few
insurers have already withdrawn some existing products and re-launched them in line
with the new regulation.
Online purchases

IRDA has permitted insurers to sell life insurance products online, which allow customers
to purchase a life insurance policy without an intermediary.

This is expected to drive down the cost of buying policies with one insurer recently
offering a discount of 40 per cent on premia for investors who opted for its online term
insurance plan.

Promoters lock-in

IRDA is also ready with the final guidelines on corporate governance pertaining to the
insurance industry. According to the guidelines, the promoters of insurance companies
would have a lock-in period of five years before they are allowed to transfer the shares
of the company to a third party.

In India, AMP Sanmar was the only insurance company to exit the business since the
sector was opened up to private players.

However, this regulation is designed to ensure that policyholders enjoy continuity as

only players with a long-term view will enter the sector.

Swarup Committee recommendations

The Swarup committee has submitted its proposals for doing away with the agent
commission that is embedded in the premium paid by the policyholder, akin to mutual
fund entry loads. It has also suggested rationalising the current commission structures of
the agent. While the agent force has predictably objected to these recommendations,
the insurance regulator, insurers and the life insurance council have also opposed these
proposals.

Direct Taxes Code

The draft of the proposed Direct Taxes Code recommended that insurance investments,
for long driven by their tax benefits, should be brought under Exempt-Exempt- Tax
regime, which would make the final proceeds of insurance policies taxable on
withdrawal. Further, it has stated that to get tax exemption, the premium payable during
the term of the policy does not exceed 5 per cent of the capital sum assured. If the
committee's proposals are accepted, insurance companies may find it hard to sell
traditional endowment products that driven largely by tax benefits.

Multiple products
IRDA is considering allowing banks to tie-up with multiple insurance companies, for
vending their products. That will give bank customers wider menu of options to choose
from, and they can buy insurance products based on their needs.

IPOs from insurers

Initial public offerings (IPOs) from insurance players have been on the anvil for some
time now. However, according to IRDA regulations, only those with a 10-year track
record are allowed to float public offers.

Reliance Life has approached IRDA to seek its permission to float a public issue, despite
a shorter history and the regulator has asked the company to approach the Government.
Currently, the Government is considering the request.

Types of life insurance products

Ulips By Portfolio Classification

1) EQUITY FUNDS

A stock fund or equity fund is a fund that invests in equities more commonly
known as stocks. Stock funds are contrasted with bond funds and money
funds. Fund assets are typically mainly in stock, with some amount of cash,
which is generally quite small, as opposed to bonds, notes, or other securities.
This may be a mutual fund or exchange-traded fund. The objective of an equity
fund is long-term growth through capital gains, although historically dividends
have also been an important source of total return. Specific equity funds may
focus on a certain sector of the market or may be geared toward a certain
level of risk.

Stock funds can be distinguished by several properties. Funds may have a

specific style, for example, value or growth. Funds may invest in solely the
securities from one country, or from many countries. Funds may focus on
some size of company, that is, small-cap, large-cap, et cetera. Funds which
involve some component of stock picking are said to be actively managed,
whereas index funds try as well as possible to mirror specific stock market
indices.

TYPES OF EQUITY FUNDS

Index fund

Index funds invest in securities to mirror a market index, such as the S&P 500. An
index fund buys and sells securities in a manner that mirrors the composition of
the selected index. The fund's performance tracks the underlying index's
performance. Turnover of securities in an index fund's portfolio is minimal. As a
 result, an index fund generally has lower management costs than other types of
funds.

Growth fund

A growth fund invests in the stock of companies that are growing rapidly. Growth
companies tend to reinvest all or most of their profits for research and
development rather than pay dividends. Growth funds are focused on generating
capital gains rather than income.

Value fund

This is a fund that invests in "value" stocks. Companies rated as value stocks
usually are older, established businesses that pay dividends

Sector fund

A fund that invests in one area of industry is called a sector fund. Most sector
funds have a minimum of 25% of their assets invested in its specialty. These
funds offer high appreciation potential, but may also pose higher risks to the
investor. Examples include gold funds (gold mining stock), technology funds, and
utility funds.

Income fund

An equity income fund stresses current income over growth. The funds objective may be
accomplished by investing in the stocks of companies with long histories of dividend
payments, such as utility stocks, blue-chip

stocks, and preferred stocks.

Option income funds invest in securities on which options may by written and
earn premium income from writing options. They may also earn capital gains from
trading options at a profit. These funds seek to increase total return by adding
income generated by the options to appreciation on the securities held in the
portfolio.

Balanced fund

Balanced Funds invest in stocks for appreciation and bonds for income. The goal
is to provide a regular income payment to the fund holder, while increasing its
principal.

Ulips by structure

OPEN ENDED FUNDS

A type of mutual fund that does not have restrictions on the amount of shares the fund
will issue. If demand is high enough, the fund will continue to issue shares no matter
how many investors there are. Open-end funds also buy back shares when investors
wish to sell.

The majority of mutual funds are open-end. By continuously selling and buying back fund
shares, these funds provide investors with a very useful and convenient investing
vehicle.

It should be noted that when a fund's investment manager(s) determine that a fund's
total assets have become too large to effectively execute its stated objective, the fund
will be closed to new investors and in extreme cases, be closed to new investment by
existing fund investors.

CLOSED ENDED FUNDS.

A type of mutual fund that does not have restrictions on the amount of shares the fund
will issue. If demand is high enough, the fund will continue to issue shares no matter
how many investors there are. Open-end funds also buy back shares when investors
wish to sell.

The majority of mutual funds are open-end. By continuously selling and buying back fund
shares, these funds provide investors with a very useful and convenient investing
vehicle.

It should be noted that when a fund's investment manager(s) determine that a fund's
total assets have become too large to effectively execute its stated objective, the fund
will be closed to new investors and in extreme cases, be closed to new investment by
existing fund investors.

is a collective investment scheme with a limited number of shares.

New shares are rarely issued after the fund is launched; shares are not normally
redeemable for cash or securities until the fund liquidates. Typically an investor can
acquire shares in a closed-end fund by buying shares on a secondary market from a
broker, market maker, or other investor as opposed to an open-end fund where all
transactions eventually involve the fund company creating new shares on the fly (in
exchange for either cash or securities) or redeeming shares (for cash or securities).

The price of a share in a closed-end fund is determined partially by the value of the
investments in the fund, and partially by the premium (or discount) placed on it by the
market. The total value of all the securities in the fund divided by the number of shares
in the fund is called the net asset value (NAV) per share. The market price of a fund
share is often higher or lower than the per share NAV: when the fund's share price is
higher than per share NAV it is said to be selling at a premium; when it is lower, at a
discount to the per share NAV.

INTERVAL FUNDS

An interval fund is a type of investment company that periodically offers to repurchase

its shares from shareholders. That is, the fund periodically offers to buy back a stated
portion of its shares from shareholders. Shareholders are not required to accept these
offers and sell their shares back to the fund.

Legally, interval funds are classified as closed-end funds, but they are very different
from traditional closed-end funds in that:

Their shares typically do not trade on the secondary market. Instead, their shares are
subject to periodic repurchase offers by the fund at a price based on net asset value.

They are permitted to (and many interval funds do) continuously offer their shares at a
priced based on the fund’s net asset value.

An interval fund will make periodic repurchase offers to its shareholders, generally every
three, six, or twelve months, as disclosed in the fund’s prospectus and annual report.
The interval fund also will periodically notify its shareholders of the upcoming
repurchase dates. When the fund makes a repurchase offer to its shareholders, it will
specify a date by which shareholders must accept the repurchase offer. The actual
repurchase will occur at a later, specified date.

Note that interval funds are permitted to deduct a redemption fee from the repurchase
proceeds, not to exceed 2% of the proceeds. The fee is paid to the fund, and generally is
intended to compensate the fund for expenses directly related to the repurchase.
Interval funds may charge other fees as well.

The advantages of life insurance

Life insurance comes in many types and has many advantages depending on the type of
policy that has been purchased. Life insurance types consist of term insurance and
permanent insurance. Permanent life insurance comes with options that are not included
with term insurance such as a cash value. There are also tax advantages that come with
certain types of life insurance polices. The benefits that are provided by a life insurance
policy will normally outweigh the cost of the premium.

Whole LIfe

Individuals who choose this type of life insurance policy are provided lifelong coverage
as long as the premiums are paid for the policy. Whole life insurance is known as a
permanent life insurance policy because the policy never expires. This means that as
long as the policy is in force the death benefit will always be available to be paid to the
policy's beneficiary. This type of policy also includes a savings component which is
known as cash value.

Term Life

Term life insurance is available in lengths or terms that can vary between 10, 20 and to
30 years of coverage. Premiums need to be paid annually for each year of the policy
term, and policies are normally renewable for an additional term. This type of policy has
a pre-determined death benefit that is paid when the owner of the policy dies.

Benefits

Term life and whole life insurance policies have benefits depending on what type of
policy is needed by the insured person. Term life insurance typically has cheaper
premiums which offer a high amount of coverage for a cheaper cost. Whole life
insurance is guaranteed coverage for the life of the policy owner as long as the policy
does not lapse for non-payment. The cash value of a policy can also be borrowed against
if funds are needed.

Cash Value

Individuals with a whole life insurance policy build a cash value with each premium
payment that is made for the policy. The cash value is a savings component that can be
used in an emergency is money is needed right away. This is in the form of a policy loan
that is not taxed because the loan is considered a debt and not income. However, the
amount that is borrowed needs to be paid back or the loan amount is deducted from the
death benefit when the owner of the policy dies.

Taxes

Life Insurance has no taxes that apply to the benefits that are paid when the owner of
the policy dies. This applies to all types of life insurance that pay a death benefit,
including term life and whole life insurance policies. Also, any earnings that accumulate
on the cash value of a whole life insurance policy are also not taxed as income.

Disadvantages of life insurances

Universal life insurance is a type of life insurance which combines aspects of term life
insurance and whole life insurance. Like whole life insurance it can be kept for a policy
holder's entire life if sufficient minimum premiums are paid in. As with term life
insurance the amount of coverage and amount paid in premiums can be adjusted to fit
the policy holder's needs and ability to pay and adjusted over time.

Cash Value Fluctuates

The cash value that a universal life insurance policy has will fluctuate depending on the
performance of the insurance company's investments. While there is usually a minimum
amount of interest regardless of how poorly the investments do lower returns can cause
policy holders to see their cash values drop and they might need to increase premiums
to keep the policy from lapsing.

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Lower Cash Value Returns

A major draw back to universal life insurance is that the cash value returns that a policy
holder earns on in his policy might not be as great as the returns he could have had if he
invested the money on his own. This is because the fees for an insurance company are
higher than most mutual funds. This is only a disadvantage if the policy holder actually
would invest the money he saves and most individuals do not actually do this. Universal
life insurance is generally more expensive than term life insurance but less expensive
than other types of permanent life insurance. The amount a policy holder chooses to put
into a universal life policy will also be a factor. This is because universal life allows policy
holders the flexibility to choose the amount they will put into the policy in order to build
up cash value. Insurance companies have the ability to raise the mortality charge to the
policy maximum and often do so in response to hidden expenses.

High Commissions Paid to Broker

The amount of commission that an insurance broker receives on universal life insurance
is higher than on other types of life insurance. In some instances it can be as high as a
year's worth of premiums. This might indicate that universal life insurance has a lot of
overhead and is thus expensive. In addition it indicates that brokers might have an
incentive to push this type of life insurance over others.

Regulations of life insurance in india

INDIAN CONTRACT ACT..

Indian Contract Act 1872 is the main source of law regulating contracts in Indian law, as
subsequently amended.

It determines the circumstances in which promise made by the parties to a contract shall
be legally binding on them. All of us enter into a number of contracts everyday
knowingly or unknowingly. Each contract creates some right and duties upon the
contracting parties. Indian contract deals with the enforcement of these rights and
duties upon the parties.

The Indian Contract Act 1872 sections 1-75 came into force on 1 September 1872. It
applies to the whole of India except the state of Jammu and Kashmir. It is not a complete
and exhaustive law on all types of contracts.

INCOME TAX ACT..

Indian Income Tax deduction - Section 80C (official page India Income Tax Act)

Section 80C of Indian Income Tax Act is the most popular because it is directly related to
tax deductions for your monthly savings or life insurance. In financial years 2008/2009
and also in 2009/2010 the maximum income tax deduction allowed under section 80C is
1,00,000. The following is a list of important ways in which a taxpayer can get benefit of
section 80C of Indian Income Tax Act.

Provident Fund (PF): Any contributions to Provident Fund, Voluntary provident Fund (VPF)
or savings made in Public Provident Fund (PPF Account) are eligible for income tax
deduction under section 80C of Indian Income Tax Act.

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Life Insurance Premiums: Any Life Insurance premiums (for one or more insurance
policies) paid by you for yourself, your spouse or your children is eligible under income
tax deduction under section 80C of Indian Income Tax Act.

ELSS Equity Linked Saving Schemes: Any investment made in certain Mutual Funds
called equity linked saving schemes qualifies for section 80C deduction. Please note that
not all mutual fund investments are eligible for this deduction. Some examples of ELSS
funds are
: SBI Magnum Tax Gain, HDFC Tax Saver, HDFC Long term advantage, etc.

ULIP (Unit Linked Insurance Plan): Investments made in certain ULIPs of Unit Trust of
India and LIC of India are eligible for 80C deduction.

Bank Fixed deposits or Term deposits of >5 years: According to a relatively new
provision amount saved in fixed deposits of term at least five years is eligible for income
tax deduction under section 80C of Indian Income Tax Act.

Principal part of EMI on Housing Loan: If you are paying EMI on a housing loan, note that
the EMI (equated monthly installments) consists of two parts - principal part and interest
part. The principal part of the EMI on your housing loan is eligible for income tax
deduction under section 80C. Note that the interest part is also eligible for tax deduction,
however not under section 80C but section 24. (read below). If you do not own a house
but pay rent for it, see section 80GG of Indian Income Tax Act below.

Tution Fees: Amount paid as tution fee for the education of two children of the assessee
is eligible for deduction under section 80C of Indian Income Tax Act.

Other 80C deductions: Amount saved in National Saving Certificate (NSC), Infrastructure
Bonds or Infra Bonds, amount paid as stamp duty and registration charges while buying
a new home are eligible for income tax deductions under section 80C of Indian Income
Tax Act.Indian Income Tax deduction - Section 80D: (official page Indian Income Tax Act)

Section 80D of Indian Income Tax Act is especially useful if your employer does not cover
your health or medical expenses. It is a good idea to get medical insurance or health
insurance for you, your spouse, dependent children or dependent parents, as you can
claim a deduction of upto Rs. 15000/- per anum for the premia paid on this insurance.
For senior citizen this limit is Rs. 20000. With effect from 1-4-2009, you can claim the
total of the following items for deduction under section 80D.

Total amount of premium paid for health insurance of family (meaning spouse +
children), or Rs. 15,000 , whichever less.

Total amount of premium paid for health insurance of your parents or Rs. 15,000,
whichever less.

Thus if you are paying premiums of mediclaim policies for your spouse children and
parents you can get a total tax deduction of upto Rs. 30,000

INSURANCE REGULATORY DEVELOPMENT AUTHORITY

The Government of India has enacted the Right to Information Act, 2005 which has
come into effect from October 13, 2005. The Right to Information under this Act is meant
to give to the citizens of India access to information under control of public authorities to
promote transparency and accountability in these organisations. The Act, under Sections
8 and 9, provides for certain categories of information to be exempt from disclosure. The
Act also provides for appointment of a Chief Public Information Officer to deal with
requests for information.

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IRDA’s Obligation under the Act

The Insurance Regulatory and Development Authority (IRDA) is a public authority as

defined in the Right to Information Act, 2005. As such, the Insurance Regulatory and
Development Authority is obliged to provide information to members of public in
accordance with the provisions of the said Act.

Access to the Information held by IRDA

The right to information includes access to the information which is held by or under the
control of any public authority and includes the right to inspect the work, document,
records, taking notes, extracts or certified copies of documents / records and certified
samples of the materials and obtaining information which is also stored in electronic
form.

Complaints against Insurance Companies

IRDA has provided for a separate channel for lodging complaints against deficiency of
services rendered by Insurance Companies. If you have a complaint/grievance against
an insurance company for poor quality of service rendered by any of its offices/branches,
please approach the Nodal Officer of the Insurance Company concerned. In case you are
not satisfied with the Insurance Company’s response you may also file a complaint with
the Insurance Ombudsman in your State. The Insurance Ombudsman is an independent
office to provide speedy and cost effective resolution of grievances to the customers. For
more details on Insurance Ombudsman Scheme and their contact numbers, please visit
http://www.irdaindia.org/ins_ombusman.htm.

Complaints from Policyholders

Policyholders who have complaints against insurers are required to first approach the
Grievance/Customer Complaints Cell of the concerned insurer. If they do not receive a
response from insurer(s) within a reasonable period of time or are dissatisfied with the
response of the company, they may approach the Grievance Cell of the IRDA. For details
of contact, please visit IRDA website http://irdaho/irdaweb/grievancescell.htm

METLIFE INSURANCE COMPANY PROFILE

PEDIGREE & ESTABLISHMENT OF THE COMPANY

The origins of Metropolitan Life Insurance Company (MetLife) go back to 1863, when a
group of New York City businessmen raised $100,000 to found the National Union Life
and Limb Insurance Company.

The new company insured Civil War sailors and soldiers against disabilities due to
wartime wounds, accidents, and sickness. In 1868, after several reorganizations and five
difficult years, the company decided to focus on the life insurance business. A new
company was chartered to sell "ordinary" insurance to the middle class. The founders
chose the name because they had been most successful in New York City, or the
"Metropolitan" District.

This new venture also faced difficulties. A severe business depression that began in the
early 1870s rapidly put half of the 70 life insurance companies operating in New York
State out of business. Only very large, long-established ordinary life insurance
companies remained strong. Policy lapses over successive years forced the company to
contract until it reached its lowest point in the late 1870s.

13
In 1879, MetLife President Joseph F. Knapp turned his attention to England, where
"industrial" or "workingmen's" insurance programs were widely successful. American
companies had not bothered to pursue industrial insurance up to that time because of
the expense involved in building and sustaining an agency force to sell policies door to
door and to make the weekly collection of five- or ten-cent premiums.

By importing English agents to train an American agency force, MetLife quickly

transferred successful British methods for use in the United States. By 1880, the
company was signing up 700 new industrial policies a day. Rapidly increasing volume
quickly drove down distribution costs, and the new program proved immediately
successful.

The MetLife agent became an important person in the lives of these striving families.
Manuals instructed agents to call at a home at the same time each week to ensure
familiarity and contact. In the process of collecting premiums, insurance agents listened
to the problems, concerns, and hopes of their clients. So successful was this approach
that by 1909, MetLife became the nation's largest life insurer in terms of insurance in
force, a leadership position we continue to hold today in North America

INVESTOR SERVICE CENTRE

With over 140 years of experience, the MetLife companies are a leading innovator and a
recognized leader in protection planning and retirement and savings solutions around
the world. We have established a strong presence in the Americas, Europe and Asia
Pacific through organic growth, acquisitions, joint ventures and other partnerships. We
are strengthening our global brand MetLife by extending core products and
competencies to markets around the world – an important driver of growth of the
enterprise.

In Asia, it operates in the following countries

Australia

China

Hong Kong

India

Japan

Korea

Taiwan

Metlife India--

Tel: 9180 2643 8638

Fax: 9180 2652 1970

e-mail: Indiaservice@metlife.com

www.metlife.co.inMetLife India Insurance Company Limited (MetLife) is an affiliate of

MetLife, Inc. and was incorporated as a joint venture between MetLife International
Holdings, Inc., The Jammu and Kashmir Bank, M. Pallonji and Co. Private Limited and
other private investors. MetLife is one of the fastest growing life insurance companies in
the country. It serves its customers by offering a range of innovative products to
individuals and group customers at more than 700 locations through its bank partners
and company-owned offices. MetLife has

14

more than 55,000 Financial Advisors, who help customers achieve peace of mind across
the length and breadth of the country.

KEY PERSONEL

Management Team

1]Rajesh Relan

Managing Director

2]MSVS Phanesh

Appointed Actuary

3]Sameer Bansal

Director- Agency

4]Nitish Asthana

Director- Bancassurance & Business Partnerships

5]Joydeep Mukherji

Chief Financial Officer

6]Balachander Sekhar

Director - Marketing

7]KR Anil Kumar

Director - Legal & Risk and Company Secretary

8]P. S. Sankaran

Director – Compliance & Internal Controls

9]KS Raghavan

Chief Administrative Officer

10]Gaurav Sharma

Director - Customer Service and Operations

11]Shilpa Vaid

Deputy Director- Human Resources

15
INVESTMENT SCHEMES & OBJECTIVES

EQUITY SCHEMES-- The Equity Market

The financial year 2010 started on a positive note aided by strong FII inflows and global
trends. The Sensex touched a two year high of 17,970 on 7th April 2010. The upbeat
economic outlook and expectations of a normal monsoon have raised market
sentiments.

The quarter started with good results from corporates, especially in the Information
Technology and Banking sectors. However, The towards the end of April, global markets
witnessed a sell off after a downgrade of Greece and Spain by S &P. The world markets
are concerned regarding a sovereign default by Greece. However, good corporate
results coming in from various economies have raised hopes of a possible worldwide
economic revival. Sensexwitnessed a high of 17,970 and a low of 17,380 through the
month. However, it ended flat in the month of April.

In the first Monetary Policy statement for financial year

2010-11, R B I raised the Credit R eserveRatio (C R R ),R everseRepo and Repo Rate by 25 basis
points each, primarily to tackle high inflation. R B I highlighted that Government's
borrowing programme would not hamper private credit demand and the economic
recovery process would be maintained. The IMF in its report in April has projected
India's G DP growth rate at 8.8% in 2010.

The Fund Manager's Commentary

The Economic scenario looks upbeat with strong GDP numbers of 8.5% for FY 2011.
Inflation continues to be a point of concern, with commodity and fuel prices moving
upwards. RBI continues to monitor the situation and is expected to continue
tightening measures.

At the industry level, corporate hiring and capital expansion plans augur well for a
sustained revival. The increase in banking credit is expected to be 20% at an overall
level, which would contribute to industrial growth.

HYBRID SCHEMES- DEBT ORIENTED & EQUITY ORIENTED

Government Securities

The current 10-year Government security (6.35% 2020) benchmark yield increased
23 basis points for the month to close at 8.06%. The increase was mainly due to
the introduction of the new 10-year benchmark in a recent auction and the
illiquidity discount for this security. The yield on new 10-year Government security
(7.80% 2020) closed at 7.75% on 30th April.
16

THE FIXED INCOME MARKET

The key event for fixed income markets for the month of April was the Monetary Policy
statement for financial year 2010-11 on 20th April. RBI raised the Credit Reserve Ratio,
Reverse Repo and Repo Rate by 25 basis points each. The primary objective was to
anchor inflation expectations to sustain the process of recovery in the economy.

The Wholesale Price Inflation (WPI) was largely flat at 9.90%

year-on-year in March 2010 compared to 9.89% in February

2010. With expectations of a normal monsoon, Food Price inflation is expected to

soften going forward. However, markets are concerned about the adverse impact of
rising commodity and fuel prices on inflation.

Industrial output rose by less than expected rate of 15.1% y-o-y in February (consensus
was at 16.0%) compared to 16.7% in January. However, domestic consumption and
economic outlook remains strong for the year. The higher bank credit target for this
year may exert an upward pressure on yields.

CORPORATE BONDS
There was a significant demand for corporate bondsduring the month leading to a
significant
narrowing of spreads on the 10 year AAA corporate bond (with respect to 10 year
Government security).It compressedfrom around 100 bps to 65bps during the
month. A similar
compression of spread was seen in the 5 year corporate bond segment as well
17

Marketing of life insurance products

Product Form

TYPES OF LIFE INSURANCE PRODUCTS..

Types Of Life Insurance Products(Term Assurance)

Based on the benefit patterns the traditional Life Insurance products can be categorised
into the following types:

Term Insurance

Whole Life Insurance

Endowment Insurance

Annuities

Term Insurance provides for life insurance protection for the selected term (period of
years) only. In case the person (whose life is insured) dies during the term, the benefits
are payable under the policy and in case of his survival till the end of the selected term
the policy normally expires without any benefit becoming payable. Term insurance may
be regarded as temporary insurance and is more nearly comparable with "Property &
Casualty insurance" contracts than the other forms of Life insurance contracts.

Whole of Life Assurance

As the name suggests, the whole life insurance policies are intended to provide Life
Insurance protection over one's lifetime. The essence of whole life insurance is that it
provides for payment of the assured amount upon the insured's death regardless of
when it occurs. Under these policies, the payment of the assured sum is a certainty in
contrast to the term insurance contracts. Only the time of payment of the assured sum is
an uncertainty.

Whole life policies can be either participating type or non-participating type.

Participating type policies are those which are entitled to a share in the distributable
surplus (profits) of the Life Insurance company, whereby the cash value of the policy can
go up, with the announcement of bonus / dividend. Non-participating policies have the
same benefit throughout the life of the policy.

There can be the following types of whole life policies:

1. Ordinary Whole Life Insurance

2. Limited Payment Whole Life Insurance

3. Convertible Whole Life Insurance

Endowment Assurance
These are the most commonly sold policies. These policies assure that the benefits
under the policy will be paid on the death of the life insured during the selected term or
on his survival to the end of the term. Hence the assured benefits are payable either on
the date of maturity or on death of the life insured, if earlier.

18

Endowment policies assist in providing for the payment of a lump sum amount for a
specific purpose, say, provision for retirement, meeting the needs of the child etc. The
money required for the purpose will be built up whether the person is alive till that date
or not. Like whole life insurance policies, endowment policies can also be of participating
and non-participating types.

Annuities

An annuity is a series of periodic payments. An annuity contract is an insurance policy,

under which the annuity provider (insurer) agrees to pay the purchaser of annuity
(annuitant)a series of regular periodical payments for a fixed period or during someone's
life time.

Classification of Annuities: Annuities can be classified on the basis of :-

The number of lives covered

Single

Joint

The beginning of the payment of annuity

Immediate annuity

Deferred annuity

Method of premium payment

Single premium

Regular instalment

Non Traditional Covers

Universal Life Insurance (ULI) is another non-traditional type of Life Insurance introduced
in the United States in the year 1979, which had an adjustable face value (insurance
coverage), floating interest rates based on market conditions and unbundling of savings
and protection elements of Life Insurance. After paying an initial minimum premium,
policy owners may thereafter pay whatever amount and at whatever times they wish, or
even skip premium payments, provided the cash value will cover policy charges.
Similarly they had the option to raise or reduce the face value of the Insurance policy.
For increasing the insurance coverage proof of continued insurability was insisted.

Under this type of policy (ULI), the policyholder pays an initial premium, which should
not be less than a minimum for the given face value and the attained age of the Life to
be Insured. From this premium payment, the mortality charge for the first period and the
expenses charges will be deducted and the balance will be the policy's cash value. To
this cash value a certain interest (depending upon the rate of interest prevailing in the
market) will be credited at the end of the period.

Unit Linked Insurance Plan

Unit Linked Insurance Plan (ULIP) is life insurance solution that provides for the benefits
of risk protection and flexibility in investment. Part of the premium you pay goes towards
the sum assured (amount you get in a life insurance policy) and the balance will be
invested in whichever investments you desire - equity, debt or a mixture of both.

19

The investment is denoted as units and is represented by the value that it has attained
called as Net Asset Value (NAV). The fund value at any time varies according to the
value of the underlying assets at the time. This is similar to mutual funds.

ULIP provides solutions for insurance planning, financial needs, and many types of
financial planning including children’s marriage planning.

The tax benefit for life insurance plans also extend to the time of maturity and in case of
death claim under Section 10(10)D. However for ULIPs the maturity benefit is tax free
only if the premium paid per year is less the 20% of the life insurance cover. In other
words the life cover has to be at least 5 times the premium. As per the New Direct Tax
Code (which will come into force from April 1st 2011) this benefit will be available only if
the life cover is 20 times the premium.

SPECIALIZED PRODUCT

For the corporate world

Met Loan Assure

MetLife offers ‘Met Loan Assure’, a group life insurance policy linked to loans. It provides
life insurance cover on the outstanding loan amount so that your loved ones do not have
to bear the burden of a loan, in case of unexpected events. It also gives you a joint life
option, the convenience of single premium payment and ease of application.

PRODUCT BENEFITS

Death Benefit

The death benefit under this policy will be the outstanding loan amount, as on the date
of death of the insured borrower, as set out in the Schedule to the Certificate of
Insurance

Surrender Benefit

The coverage shall be terminated and a surrender value shall be paid if the borrower
prepays the outstanding loan amount in full before the coverage expiry date or if the
group policyholder cancels the policy under circumstances such as winding up or any
other form of corporate restructuring and results in the group policyholder ceasing to
exist after such restructuring.

FOR THE INDIVIDUAL’S

Met Magic Plus

"IN THIS POLICY, THE INVESTMENT RISK IN THE INVESTMENT PORTFOLIO IS BORNE BY
THE POLICYHOLDER"

Indeed, when it comes to determining your family, particularly your child's destiny you
would want to make the right choices so that nothing is left to chance. However it is your
decision today that is going to ensure that your family's future turns out to be exactly as
you had planned.MetLife presents 'Met Magic Plus', a unit linked Non-Medical Regular
Premium Life Insurance plan with which you can secure your child's future. A flexible
plan, Met Magic Plus provides the benefit of insurance protection to your family,
particularly your child, even when you are not around.

20

What's more - buying this plan is extremely simple without the requirement to undergo
any medical examination.

PRODUCT BENEFITS

Death Benefit

In the unfortunate event of death of the parent (person insured) during the term of the
policy, the child (beneficiary) will be paid the Sum Assured.

In addition, the plan will continue and add all future premiums that would otherwise
have been accumulated had the parent (person insured) been alive, into the fund on an
annual basis as and when each such regular premium falls due.

The policy shall continue to be in-force, with future premiums waived, till the date of
maturity or the date of notification of the death of the child (Beneficiary), whichever is
earlier.

Maturity Benefit

On maturity the Fund Value in the Unit Account is paid. The fund can be payable either
as:

(i) One lump sum or

(ii) Over a period of 5 years as a part of the settlement options.

Guaranteed Loyalty Additions

The unique feature of this policy Guaranteed Loyalty Additions are into the fund in form
of units in equal annual installments from the 6th year onwards till the end of the term
provided:

- All Regular Premiums due till date have been paid and the policy is in force.

- Death claim has not been paid during the policy term.

FOR THE NRI’S

Every Indian, whether here in India or settled abroad, needs peace of mind and a secure
financial future for his/her loved ones. The need is felt more when you’re away from your
homeland and your loved ones. We, at MetLife, understand this need and are committed
to providing best in class services to cater to such needs.

Introducing MetLife India NRI Insurance Services.

Our life insurance plans are formulated keeping in mind your needs at various stages in
your life; whether it is the security of your family, regular saving cum protection or life
long pensions.

21

CHALLENGES & OPPURTUNITIES IN MARKETTING

MARKETTING CHANNELS
Insurance Intermediaries
Insurance companies sell their products mainly through the following:
i. Agents (who are the representatives of the Insurer)
ii. Independent Intermediaries (who are the representatives of the Buyer)
iii. Direct Sales including through ‘online’ and ‘Referrals.
Agents
In Insurance industry the term “Agent” is ordinarily applied to a person engaged by
the insurer to procure new business. An Agent can work for one life insurer and/or one
non-life insurer and in addition to this, to one ‘exclusive health insurer’.
Insurance agents are intermediaries whose activities include soliciting, procuring,
and servicing the general insurance market. An agent must fulfill the statutory
requirements of his competence prescribed by the regulator and for which he has
to pass the stipulated examination to satisfy the regulator after undergoing specified
number of hours of training at accredited institutions (online / off-line). Upon the
successful completion of the examination, all the agents in the insurance business
are given license granted as provided under Insurance Regulatory and Development
Authority (Licensing of Insurance Agents) Regulations, 2000, as amended upto date.
Application for the same are to be made in prescribed form. The contact of agency
between the company and agent defines the authority and responsibility and sets
forth the agreement of the parties with respect to commissions and other details of the
relationship. Agency license can also be granted to cooperative societies, panchayats,
corporate entities, and banks. Renewal of license should be done in time by paying
the prescribed fees.
However, no license can be granted, if the individual suffers from any of the following
Disqualification:
if the person is a minor.
if found to be of unsound mind by a competent court.
if found guilty of or connived at any fraud, dishonesty or misrepresentation against
any insured or insurer.

22

Introduction to General Insurance

The appointment of agents is governed by Insurance Regulatory and Development
Authority (Licensing of Insurance Agents) Regulations, 2000. The IRDA has prescribed
both qualifications and disqualification for a person to be given a licence under section
42 of the Insurance Act.
A person must:-
a) Be at least of 18 years of age.
b) Have passed at least 12th standard or equivalent examination appointed if he/she
resides in a place having a population of five thousand or more as per the last
census, or 10th standard otherwise.
c) Have undergone a training program of 50 hours in Life or General insurance
business or any other pre-recruitment examination recognized by IRDA. (However
there are reduction in the required hours based on insurance qualifications, etc.
of the applicant for Agency.)
d) For a composite agency, a person should have completed 75 hours of training
in Life and General insurance business spread over 6 to 8 weeks.
An agency licence is usually given for 3 years, which may be either renewed or
cancelled later. But before renewal of the licence, it is a prerequisite that the agent
should have undergone 25 hours of practical training in Life and General Insurance
business or at least 50 hours practical training in subject for a composite agency
renewal. The agent is expected to procure a minimum premium amount depending
upon the company rules and targets.
The agent is paid commission as remuneration for discharge of all his functions,
the commission rates are subject to the guide lines issued from time to time by the
IRDA.
Corporate Agents
The IRDA has also allowed Corporate Agents to act as insurance intermediaries to sell
insurance products. As per the Act, a Corporate Agent means any person specified in
clause (k) of the Act, and licensed to act as such, while a Composite Corporate Agent
means a Corporate Agent who holds a licence to act as an insurance agent for a life
insurer and a general insurer.
Principles and Practice of General Insurance
Qualifications
– The corporate agent should ensure that depending upon the nature of the entity,
the Partnership Deed, Memorandum of Association or any other document
evidencing the constitution of the entity shall contain as one of its main objects
soliciting or procuring insurance business as a Corporate Agent.
– The corporate insurance executive shall possess the minimum qualification of a
23

pass in 12th Standard or equivalent examination conducted by any recognised

Board/Institution, where the applicant resides in a place with a population of
five thousand or more as per the last census, and a pass in 10th Standard or
equivalent examination from a recognised Board/Institution if the applicant resides
in any other place.
– Should have completed from an approved institution, at least, fifty hours’ practical
training which may be spread over one to two weeks, in either life or general
insurance business, as the case may be.
– Or shall have completed from an approved institution, at least, seventy five
hours’ practical training both in life and general insurance business, where such
an applicant is seeking licence for the first time to act as a composite corporate
agent.
The applicant seeking the Corporate Agency from the authority or any other corporate
insurance executive of the applicant should be a professional as mentioned below:
(a) an Associate/Fellow of the Insurance Institute of India, Mumbai;
(b) an Associate/Fellow of the Institute of Chartered Accountants of India, New
Delhi;
(c) an Associate/Fellow of the Institute of Costs and Works Accountants of India,
Calcutta;
(d) an Associate/Fellow of the Institute of Company Secretaries of India, New
Delhi;
(e) an Associate/Fellow of the Actuarial Society of India, Mumbai;
(f) a Master of Business Administration of any Institution/ University recognised by
any State Government or the Central Government; or
(g) possessing Certified Associateship of Indian Institute of Bankers (CAIIB); or
(h) possessing any professional qualification in marketing from any Institution/
University recognised by any State Government or the Central Government;
(i) (from 1.4.2009, it is compulsory that a Broker should have the Designated Person
with qualification of AIII / FIII).

24

Tie ups with banks

Besides individuals, some of the companies are making use of banks, building
societies and others as agents to increase the new business volumes. Further, tied
agency has also become a popular channel of distribution where in the tied agents
are representatives of the company drawing commissions as remuneration.
Banks, under the contract of “bancasurrance” which is the strategic alliance between
an insurance company and the bank, where in the banks use their resources and client
base to augment sales of insurance policies. This arrangement provides mutual benefit
to the bank as well as the insurance company and more importantly value addition to
the customer, who can derive insurance services also from his bank counter.

Jammu & kashmir Rural Bank to distribute MetLife products

JAMMU: MetLife India Insurance Co. Pvt. Ltd on Tuesday announced that it has
signed a
memorandum of understanding with the Jammu Rural Bank to sell life insurance
products
through the bank's network of 90 branches in Jammu, Kathua, Poonch and
Rajouri.
Announcing the tie-up, Vikrant Pande, Director, Bancassurance, MetLife, said,
"Our
association with Jammu Rural Bank will help us expand our product reach as well
as bring
unique benefits to the customers of the bank." "Today's launch is a significant
milestone in
the bank's history of continually upgrading our financial services and products,"
commented
K. N. Sher, Chairman, Jammu Rural Bank.
MetLife India Insurance Company Limited (MetLife) is an affiliate of MetLife, Inc.
and was
incorporated as a joint venture between MetLife International Holdings, Inc., The
Jammu and
Kashmir Bank, M. Pallonji and Co. Private Limited and other private investors.
MetLife is one
of the fastest growing life insurance companies in the country. It serves its
customers by
offering a range of innovative products to individuals and group customers at
more than 600
locations through its bank partners and company-owned offices. MetLife has
more than
50,000 Financial Advisors, who help customers achieve peace of mind across the
length and
breadth of the country by providing life insurance plans.
Independent Intermediaries (Brokers)
Brokerage has also become a very popular distribution channel for marketing Life and
General insurance business. Also known as Independent financial advisors (IFAs),
these advisors have become the popular source of procurement of business in the
advanced markets. Brokers canvas the business and place the same with insurers
either on standard or negotiated terms. They are also authorized to negotiate with
insurers for tailor-made policies to cater to the customer’s specific needs. A broker
usually does business with more than one company and in return gets commission.
However, he does not charge anything from the client. He is bound by the IRDA
25

Regulations to give best advice to his client and acts on behalf of the advice seekers.
Basically, a Broker is the representative of the insurance buyer.
A broker is a through professional who is registered and licensed to offer his professional
advice to the clients. IRDA has prescribed guidelines for Brokerage registrations under
INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (INSURANCE
BROKERS) REGULATIONS, 2002. An insurance broker is an individual / firm /
Company / Co-op. Society who advises policyholders on insurance matters and places
business with the insurers. A high standard of professional skill and conduct is expected
of a broker. Moreover, if he fails to maintain the required standard he may be liable
for damages to his principal.
Although brokers are agents of the proposer, they are usually paid by the insurers
with whom they place business.
In India, there are many licensed brokers who are engaged in procuring business in
the domestic markets and also in international exchange of reinsurance business.
Besides, these brokers also provide risk management consultancy services.
Agency and brokerage systems are most common and contribute maximum share of
insurance business in the developing and developed countries.
Direct Sales
The direct Sales force (DSA) refers to sales activity procured by the staff of the

company itself has become a popular channel of distribution of insurance products

now-days. The main advantage in this channel is that commissions need not be paid

to the salaried staff. Generally this advantage of the commission savings is passed

on to the consumers by way of premium discount by the life insurance companies.

Nowadays, sales through internet or online sales is picking up particularly in case of

retail insurance of Motor and Health. Payments are made through credit cards / internet

banking. Receipts are generated online but the policies are dispatched by the Insurer

subsequently. Referrals also contribute to direct sales and this mode is also picking

up faster. Referrals provide the database already available with them, such as banks,

associations, etc. Referrals are not paid any commission but are compensated by way of

fees, whether the individuals referred by the referrals ultimately buy insurance or not.

26

Comparative study

ASSET UNDER MANAGEMENT.

Assets under management (AUM) is a term used by financial services companies in the
mutual fund, hedge fund, and money management, investment management, wealth
management, and private banking businesses to gauge how much money they are
managing. Many financial services companies use this as a measure of success and
comparison against their competitors; in lieu of revenue or total revenue they use total
assets under management .

The difference between two AUM balances consists of market performance gains/
(losses), foreign exchanges movements, net new assets (NNA) inflow/(outflow), and
structural effects of the company, such as acquisitions. Investors are mainly interested
in the NNA (sometimes called net new money or NNM), which indicate how much money
from clients had been newly invested. Furthermore, it is common to calculate the key
figure NNA growth, which shows the NNA in relation of the previous AUM balance on an
annualized basis. NNA growth can also be referred to as organic growth

Comparison of schemes with other companies

Company Aviva ICICI Kotak LIC Max New Metlife
prudential York life
Product Life shield Pure protect Preffered Anmol jevan Term life Met
Name term plan suraksha
plus
LifeShield is A cost- Kotak The plan is The level term MetLife
an insurance effective preffered available to policy plan offers 'Met
plan that plan, Pure Term standard & covers your Suraksha
protects your Protect Assurance sub standard life at a very plus - Term
Plan is low cost & Assurance
family’s comes in two specially
lives (upto protects your (TA)', a non
future from variants: designed to Class VI). family under participatin
any kind of PureProtect give that This plan is an g term
uncertainty. Classic for protection to also unfortunate assurance
It’s a low Sum Assured your family. available for event of your plan which
cost life upto 25lakhs This plan is a females & death. Incase provides
insurance and pure risk handicapper’ of unfortunate you life
plan which PureProtect cover plan s. You need death of the cover at a
guarantees Elite For sum that is truly an to submit a policy holder, nominal
economical an amount cost.. You
to pay a assured standard age
means of equal to the can further
lump sum more than providing you proof with sum assured customize
Overview
amount in Rs. 25 lakhs. with a high the proposal will be given your plan
case of your Get discount level of form. to the with two
death. You for higher protection. nominee. riders –
can increase Sum Assure. This plan Accidental
the sum Make it more offers special Death
assured of beneficial by premium rates Benefit and
the policy adding to non- Critical
tobacco users Illness. This
during the different
& women. It is plan gives
term of the riders to it. a non- you the
policy and Invest in a participating option of
this too with plan that plan with no getting
out best suits maturity back all the
submitting your benefits premiums
any evidence requirement payable. In paid at
of good s and the event of maturity.
health, in guarantee death of the Minimum
life insured sum
case of your your family
during the assured for
marriage or lifelong term, the non smoker
the birth of comfort and beneficiary starts from
your child. security. would receive rs.
the sum 25,00,000
assured as a and
lump sum. maximum
has no
limits,
Subjects to
underwritin
g.
You can
choose
between
two
options:
Term
Assurance
(TA) This
form
covers the
life insured
in case of
death
during the
policy
term.
 Min – 18yrs Min- 18 yrs Min- 18 yrs Min-18 yrs Min -18yrs Min- 18
Entry Age Max- 55 yrs Max- 65 yrs Max-65 yrs Max- 55 yrs Max- 55 yrs yrs
Max-
60yrs

Term 5- 40 yrs 10- 30 yrs 5- 30 yrs 5- 25 yrs 10-60 yrs 10-60 yrs

1) Minimum 1) You can 1) You can 1) You can 1) You can 1) You can
premium is invest invest invest invest invest
only 2000 minimum minimum minimum
(p.a.) Rs2,400 Rs18,00 minimum Rs2,170 minimum
(p.a.) (p.a.) Rs 1,414 (p.a.) Rs3,600
2) The plan (p.a.)
pays a sum 2) You can 2) (p.a.) only. 2) The DD
assured to protect your Flexibility in rider 2) It's a low
your family family from premium 2) Sum premiums cost , pure
in case of accidents or payments. assured will are eligible risk
Features your death from any be paid to for an insurance
before the unwanted 3) It’s a the additional plan.
maturity situation by very low beneficiary deduction
date. adding cost plan. in the u/s 80D up 3) You can
Accident unfortunate to Rs.15, choose a
and 4) Provides event of 000/- every met
Disability additional death of year. suraksha
Benefit cover to the the policy plus term
Rider beneficiary holder. 3) In case plan with or
in the event of the without
3) Sum of 3) Sum unfortunate return of
assured will accidental Assured death of premium.
be paid to death of life Rebate: In the life
the insured. case of insured 4) You get
beneficiary regular during the guaranteed
in the 5) Offers premium term of the additions of
unfortunate installment payment plan, an 10% of
event of s to support the rebate amount premium
your death. you & your is NIL. 4) equal to the paid along
family in Mode Sum with return
4) Can pay case of Rebate: In assured is of premium
yearly, half disability case of paid to the option of
yearlyand due to an yearly beneficiary. Met-
monthly. accident. mode the Suraksha.
annual 4) Premium
6) You get a premium is payment 5) Option of
portion of of 1% and can be different
the sum NIL in case done premium
assured in of 6months. Annual, paying
case of a Semi- modes like
critical 5) The annual, Annual,
illness. policy does Quarterly, Semi-
not require Monthly, Annual,
any paid-up and Single. Quarterly,
value. Monthly,
5) Personal Payroll
6) No Accident, Savings Plan
surrender Dread
value is disease, & 6) You can
available waiver of customize
under this premium your plan
policy too. benefit with riders
rider to increase
available. cover with
only a
marginal
increase of
premium.
Tax benefit You can Tax benefit Tax benefit Tax benefit Tax benefit
available also avail available available available as
Tax under the tax u/s 80C & under u/s 80C & applicable.
Benefits section 80C benefits U/S 10(10D) of section 80C 10(10D) of
of the 80C & Income Tax of the Income Tax
Income Tax 10(10D) of Act. Income Tax Act.
act. Income Tax act.
act.
30

Analysis of Fund performance

VIRTUE FUND

The fund will target 100% investments in Equities to meet the stated objectives.

As on 30th April 2010

Investment Objective :-To generate long term capital appreciation by investing in diversified
equities of companies promoting healthy life style and enhancing quality of life.

Asset Classes

Equities

Investment Philosophy

Portfolio Retur ns

Returns NAV Last 1 year retur n 42.46%

CAGR since inception 2.40%

BALANCER FUND
As on 30th April 2010

Investment Objective : To generate capital appreciation and current income, through a

judicious mix of investments in equities and fixed income securities.

Asset Classes

Government & other debt securities

Equities

Cash & Money Market

Investment Philosophy

The fund will target 50% investments in Equities and

50% investments in Government & other debt securities to meet the stated objectives.

Portfolio Retur ns

Retur ns NAV Benchmark Last 1 year retur n 24.11%

27.61% Last 3 year (CAGR) 10.06% 7.99% Last 5 year
(CAGR) 14.66% 15.44% CAGR since inception 13.28%
13.65%
31
 ACCELERATOR FUND

As on 30th april 2010

Investment Objective: To achieve capital appreciation by investing predominantl y in

equiti es, wi th limited investment in fixed income securities.

Asset Classes

Government & other debt securities

Equities

Cash & Money Market

Investment Philosophy

The fund will target 80% investments in Equities and

20% investments in Government & other debt securities to meet the stated objectives.

Portfolio Retur ns

Retur ns NAV Benchmark

Last 1 year retur n 36.67% 42.20%

Last 3 year (CAGR) 9.33% 8.53%

Last 5 year (CAGR) 19.18% 19.96% CAGR since inception 17.06%

17.48%

MODERATOR FUND
As on 30th april 2010
Investment Objective: To earn regular income by investing in high quality fixed
income securities and to generate capital appreciation by investing a limited portion in
equity.

Asset Classes

Government & other debt securities

Equities

Cash & Money Market

Investment Philosophy

The fund will target 20% investments in Equities and

80% investments in Government & other debt securities to meet the stated objectives.
32
Portfolio Returns
Returns NAV Benchmark

Last 1 year return 13.67% 13.02%

Last 3 year (CAGR) 9.78% 7.45%
Last 5 year (CAGR) 10.10% 10.08%

CAGR since inception 9.56% 9.16%

Findings From The project

The project helped us to have a view about the insurance sector & how it
operates. How the money

which is collected in the form of premium from The various customers/ clients,
how it is invested in

the market( i.e., in the form of shares, debentures, bonds of various companies)
to achieve

maximum return on the investment .

There are various types of insurance products available in the market which
caters to the needs of every individuals

& income class, which provides a good return upon their investment. I also
understood how it is

Important for a company to increase its market share & attract customers with
various schemes.

I also understood the role of a Financial advisor, and the pressure with which they
need to work

In order to achieve their given goals/ targets .

Recommendations

The company needs to focus on the growing population & develop a strategy
with which it can

Attract the urban & rural areas, where people are not very much familiar with the
concept of mutual
Funds. So with adequate knowledge, the company can attract a good amount of
investment rom

the rural & urban areas. The focus should be on the Dominating players of those
Areas like the

Farmers, Government service officers.etc

33

Limitations

Metlife has started its operations in India recently so the common people are not
very much aware

about the existing of the company itself. For them the term life insurance spells
out only one name-

LIC. So the company needs to advertise for its products heavily, in order to
outperform its

Competitors & acquire a substantial market share.

Conclusion

I end my project on the conclusion that Metlife is a good company, which has a
good prospect for

targeting The Indian Market, next to the LIC. All companies are guides by a set of
rules n regulations

by the IRDA which they need to follow & abide upon. All insurance companies
are good companies.
34