Prepared by:- zala Devendnasinh p. Year:- T.Y.B.B.

A Roll No:-137 Topic:- Unit Linked Insuranse Plan (ULIPs) Academic year:- 2009-2010 Submitted To:- swami Shajanand college of commerce & management

(B.B.A) Bhavnager University

CANDIDATE’S STATEMENT
I undersigned Zala Devendrasinh Pratapsinh , the student of T.Y B.B.A. Hereby declares that the project work presented in this report is my own and carried under the guideline of Branch Maneger Girirajsinh Gohil and Business Development Manager and agency manager jignesh pandya

DATE :- 01/01/2010 PLACE:-BHAVNAGER

-: SIGNATURE :Zala Devendrasinh Pratapsinh

ACKNOWLEDGEMENT
first of all I am thankful to GOD because of him , my existence is created and that’s why I am able to doing this work . than how can I forget my PARENTS ,their warm guidance and motivation helps through out my journey of developing the project. I feel great pleasure in submitting this report as a part of a practical training and studies in the professional course of management .this visit has been helped me a lot in acquiring the knowledge regarding the company. I am very helpful to our principal shilpa bhatt . our coordinator Neatra medam and the all supportive college staff for giving me the information about the project. I am also very thankful to branch manager Girirajsinh Gohil business development Manager and agency manager jignesh pandya and whole staff of TATA AIG BHAVNAGER. Research of any unit is different as more as you attempt more you go deep ,new and new detail emerged. It is not easy exercise .it is with the help of combine efforts and guidelines of our teacher, present and friends. However, I can’t express my thank to all the people of the staff in tata AIG, BHAVNAGER and for their support giving us such a great help,without a guidance of whom it is very difficult to prepare such a report.

Zala Devedrasinh Pratapsinh

PREFACE
As we know that vitamins are vital to the heelth of people and animals. In the present world not only the theoretical work is important but also the practical work is important ,which is not given in the classroom.we know that the practical work is useful in every field as well as our future lifetime. In short,student can improve his knowledge about all the sectors of markets.during the study,the student can improve their skills. In comparison to bookish knowledge, practical studies prove to be very impruvenent and nessassary as it helps a student to the practical tobe very important and necessary as it helps a student to the practical fields and get the idea about the exact position of the entrepreneur and the manager.in this way after competing studies ,one can better in the fiel of business.swami shahajanad college of commerce (sscc), BHAVNAGER,helps the student to develop their knowledge in the field of industry environment and business by the means of management of company. As a student of T.Y.B.B.A program, I have opportunity to have got practical training in the TATA AIG, BHAVNAGER. In this report I have tried to do my best to collect much can do my best as much information as I can. This report is reflection of which I undestad and learn from my traning session .this report is prepared the purpose of the study, not in theoretical way but in a practical way. Heredy I am submitting the report……..

Zala Devendrasinh Pratapsinh T.y.B.B.A

MAIN CONTENTS

1

General information

2 3 4 5 6

Insurance Mutual fund Unit link insurance plan Research & conclusion Bibliography

GENERAL INFORMATION
Tata Group profile American International Group Profile Tata AIG insurance company LTD Vision Product profile 7 8 4 5 5

and chemicals.the group was founded by jamsetji Tata in the mid 19th centure .Tata Teleservices and tata communications. American international group. jamsetji Tata and those who followed him aligned business opportunities with the objective of nation buidding.578 crores)The grup emplos around 350. among the highest among Indian business houser and a shareholder base of 2.The Group’s Net profit for 2007-08 are USD 5.Tata powar.This approach remains enshrined in the Group’s to this day. The Tata name has been respected in India for 140 years for its adherence to strong values and business ethics The business operations of the Tata group currently encompass seven business sectors – communications and information Technology. Revenues in 2007-08 are USD 62. of which 61% was from business outside India.Tata Motors.consumer products.5 billion(around rs. 251.Engineering.energy. Information systems and communications.Tata chemicals.engineering.543 crores). Consequently.Tata consultancy services(TCS). Materials Services energy.The major companies in the Group include Tata steel.21.9 million.000 people wordwide. services. materials. Tata tea.4 billion(around Rs. (AIG) Profile . Indian hotels. inc. Tata is a rapidly growing business group based in India with significant international operation. a period when India had just set out on the road to gaining independence from british rule.Tata group profile THE Tata Group comprises 98 operating companies in seven business sectors.consumer products and chemicals The Group 28 publicly listed enterprises have a combined market capitalization of around $60 billion.

Inc.switzerIand and Tokyo. (AIG). a world leader in insurance and financial services . .institutional and individual customers through the most extensive wordwide property-casuaity and life insurance networks of any insurer in addition AIG companies are leading providers of retirement services.formed by the Tata Grooup and American Intarnatinal Group. Tata AIG Life insurance company was licensed to operate in India on India on February 12.financial services and asset management around the world. Tata AIG Life Insurance company Limited (Tata AIG Life) Tata AIG Life insurance company Limited (Tata AIG Life ) is a joint venture company. (AIG)Tata AIG Life combines the Tata Group’s pre-eminent Ieadership position in India and AIG’s global presence as one of the world’s leading intarnatinal insurance and financial services organization The Tata Group holds 74 per cent stake in the insurance venture with AIG holding the balance 26 per cent Tata AIG Life provides insurance solutions to individuais and corporates.2001 and started operations on April 1.American intarnatinal group.AIG’s common stock exchanges in paris.is the leading international insurance organization with operation in more than 130 countris and jurisdiction.2001. Inc.AIG companies serve commercial.

3.189 7. Over 50.14.965 1.) 7 69 180 857 2717 4270 5730 in Key Achievement :1.443 2.376 1. 2.5. Accelerated growth .685 20.500 cr.15.81.79.00.of policies sold in FY 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 21.in cr. Shareholders capital base of rs. 4.217 30. Asset under management rs.Yearwise Number of Policies and Revenue:Fiscal No. 700 cr.000 satisfied costomers A countrywide network of 876 offices.88.84.318 New business FY(rs.

5. 3. Financial strength and stability to support the insurance busines A strong brand-equity. Ample money available to pay for education or marriage with tata AIG life assure 21 years money saver . 2. A 10 million strong base of retail customers using tata products. A good market reputation as a world class organization An extensive distribution network. 4.Vision 1. PRODUCT PROFILE FOR CHILDRAN 1. Adequate experience of running a large organization. 6.

7. Ge tyour life back and your money. The very best college &post graduate education with Tata AIG life starkid. 3. Watch your saving grow as fast as your chiled’s aspirations with Tata AIG life United Ujjwal Bhavishya. What your children to have asteady income . FOR ADULT 1.2. Want unit linked insurance plan with inbuilt critical illness benefit? See Tata AIG life investassure care .no matte rwhat happens? See Tata AIG Life Mahalife gold. 2. 4. 5. A steady . see Tata AIG health investor What a safety net and more control over your return?see Tata AIG life investassure 2. 8. 4. What sefty net and more control over your returns? See Tata AIG life investAssure 11. Financial support to receive the best education possible with Tata AIG life assure Educated at 18 & Assure Educare at 21.lifetime income with tata AIG life mahalife Gold. Are hospitalized or have aprolonged illness? See Tata AIG life investassure helth &tata AIg life health first & tata AIG life health protector -5 year guaranteed renewal accident and health plan. What a unit –linked policy with a single-premium paying term? See tata AIG life invest AASSURE plus. 5. Stay protected against 12 critical illnesses. 6. 3. The money they need to start a succesfuly career with Tata AIG life assure carreer builder.

and term to age 60 known as Assure Lifeline to Age 60 Want your money back if you outlive your policy? See Tata AIG Life LifePlus Want coverage and flexibility to get your money when you need it? See Tata AIG Life Assure 21 years Money Saver Want safety and high returns? See Tata AIG Life Assure 10 Years/15 Years/20 Years/30 Years Security and Growth Plans Want a low-cost term plan which offers a large cover? See Tata AIG Life Raksha 10/15/20/25 Want high returns at a low premium? See Tata AIG Life ShubhLife Keep your capital safe and growing with Tata AIG Life Assure Golden Years Plan Want an immediate annuity plan with return of Purchase price? See Tata AIG Life Easy Retire 7. RETIREMENT 1. Want an immediate annuity plan with Return of Purchase price? See Tata AIG Life Easy Retire . Keep your capital safe and growing with Tata AIG Life Assure Golden Years Plan 2. and protect yourself against any unforeseen eventuality? See Tata AIG Life InvestAssure Optima Don’t want to face financial risk. 2. 10.1. 13. 11. 3. 5. 6. 8. 12. 9. 4. but cannot afford high premiums? See Tata AIG Life Assure 1 year/5 Years/10 Years/15 Years/20 Years/25 Years Lifeline Plans. See Tata AIG Life InvestAssure Gold Want a unit-linked policy with a single premium paying term? See Tata AIG Life InvestAssure Plus Want to optimize your return. Want a unit-linked insurance plan with an in-built Payor Benefit? See Tata AIG Life InvestAssure Extra Want a unit-linked endowment investment plan with a host of flexible features? See Tata AIG Life InvestAssure Flexi Reap attractive rewards for a lifetime with a whole life unit linked plan.

Want a safety net and more control over your returns? See Tata AIG Life InvestAssure II 6. Give you the flexibility to choose when to retire with Tata AIG Life Nirvana 5. See Tata AIG Life InvestAssure Gold 7. lifetime income for you and your family with Tata AIG Life MahaLife Gold 4.3. Provide a stable. Guarantee additions to your sum assured with Tata AIG Life Nirvana Plus INSURANCE Fundamental of insurance Brief history of insurance sector Brief history of insurance sector in India 11 12 14 . Reap attractive rewards for a lifetime with a whole life unit linked plan. Want a custom-made retirement solution? See Tata AIG Life InvestAssure Future 8.

Further. little can be done about non-financial losses. in addition to the loss of property. particularly person who dies was an earning member or even potentially earning member.Types of insurance Insurance regulatory & development 16 19 FUNDAMENTALS OF INSURANCE In life every human being – you and we included is exposed to an element of risk. when a factory is gutted in a fire. the future of workers and fate of suppliers and consumer attached to the business. commonly defined as the possibility of loss. . which can perhaps never be compensated. In both instances. For instance when a person dies. There are then concerns about the financial stability of the dependents. the family suffers a grievous loss. These broadly relate to two spheres – our lives and our material possessions. every loss has two implications: financial and non-financial. Similarly. But financial losses can and must be addressed and using risk management tool and that is Insurance. there are other considerations: the effort to rebuild the factory. But the family also suffers another significant loss – financial loss.

”Insurance is a plan by which large number of people associate and transfer to the shoulders of all risks that attach to individuals. Among such seventeen century London coffee houses was one called Lloyd’ Coffee house owned by Edward Lloyd and situated in Tower Street. The Risk The Insured The Insurer General Definition: In words of John Magee. ”Thus in insurance.” BRIEF HISTORY OF INSURANCE SECTOR Insurance Law had its genesis in London.WHAT IS Insurance? “Insurance is a financial service for collecting the saving of the public and providing them with a risk coverage. They also had a political influence that moved the reigning king Charles II to attempt unsuccessfully their suppression. The coffee house and the advantage of . In the early London Coffeehouses were centers not only of commerce and literature but of debate and intellectual exercise as well.

ink. With passage of time Lloyd’s Coffee house become recognized as a place for people wanting insurance over to fine the underwriters. is still commonly used as standard form with suitable additional clauses to suit modern requirements. In India the marine insurance Act 1963 base on the English Marine Insurance ACT. Edward Lloyd encouraged the business by providing the customers in the coffee house with pen. Lloyd’s Coffee house thus the favorite venue for such guarantors who came to be called Underwrites to conduct business informally over cups of coffee. All insurance policies have to be in agreement with the provisions of law if contracts. other forms of insurance evolved gradually with dynamic requirements of the society. British statutes inspire the statutes in India. The provisions of the Insurance Act 1938 regulate the other variations of insurance policies. The name was immortalized although Edward Lloyd’s passed away in the year 1713. A policy of insurance codifies a contract between the insurer and the insured hence all principles of law of contracts between two or more is the Indian Contract Act 1872. The practice prevalent was that individuals wrote their names below some clauses to guarantee commercial ventures on personal basis. In England Marine a specific statute regulates insurance while other forms of insurance are covered by general legislation. Lloyds may thus be rightly known as the creators of insurance concept.being near to river Thames thus attracting the patronage of men interested and connected with marine activities. The insurance activities in the coffee house culminated in the formation of Corporation of Lloyd under the Act of 1871. Marine insurance law was thus the first form of insurance. 1906 is the legislation dealing only with aspect of Marine Insurance policies. In the seventeenth century there were no corporate entities engaged in insurance activities. Lloyd‘s Marine Insurance policy originally adopted in the year 1779. paper and shipping information obtained for the water front. .

It was in the eighteenth century. the insurance business witnessed a setback. By 1956. As a result. 154 Indian insurers. Different insurance companies like Bombay Insurance Company LTD. The first life insurance policy was issued on 18th June 1583. (1793) and Oriental life Assurance Company. on the life of William Gibbons for a period of 12 months. The act still applies to all kinds of insurance business by instituting necessary amendments from time to time. Was formed in Dec. and the merchants. 16 foreign insurers and 75 provident societies were carrying on life insurance business in India. a larger number of Indian companies were formed under the Indian companies Act. the Government of India passed insurance Act. the West Minister Society (1792) was the important societies. 1870.BRIEF HISTORY OF LIFE INSURANCESECTOR IN INDIA The early developments of life insurance were closely linked with that of marine insurance. 1938. During the period from 1900 to 1992. societies began to be formed for issuing life insurance policies. Among such societies the Amicable Society (1705). During the period from 1870 to 1900. the first Indian Company named as Bombay Mutual Life Insurance Society Ltd. The Equitable life Assurance society (1762). The early insurance contracts took the nature of policies for a short period only. After several changes have been made for the period from 1930 to 1938. the insurance business attracted attention among middle class people. The first insurers of life were the marine insurance underwriters who started issuing life insurance policies on the life of master and crew of the ship. The premium rates were varied in view of reputation and the health condition of the insured. 1866. Government of India passed the insurance Act on the model of British Assurance Act. They sometimes issued policies on the lives of Indian’s by charging extra. During the period from 1912-1930. The business was confined to few communities and occupations only. The British companies started life insurance business in India. At that time life insurance business was concentrated . by issuing policies exclusively on the lives of European soldiers and civilians.

2000. They can be classified into following two categories. and than nationalized on 1st September 1956 in the parliament an Life insurance Corporation(LIC). IRDA open its window for Application for giving new licenses to the prospective players on 16th August. Only two government giants namely LIC & GIC ruled it till it was set open to the private players. The Narasimha Rao government unleashed liberal changes in india’s rigid economic sector. Types of Insurance There are basically two types of Insurance. 1999 could be passed by the Parliament during November 1999.N. January 1956 the management of life insurance business of 245 Indian and foreign insurers and provident societies were taken over by the central Government with a capital contribution of Rs.50 mn. the insurance Regulatory Authority (IRDA) Act.in urban areas and confined to the higher strata of the society. The Indian insurance market was restricted sector. The Rao government appointed a committee of Reforms in the insurance sector in April 1993 under the chairmanship of R. INSURANCE LIFE INSURACNE GENERAL INSURANCE .Malhotra.

Endowment Policies – Cover the insured for a specific period. education. . Insurance provides you with that unique sense of security that no other form of investment provides. Whole life policies – cover the insured for life. These policies cost more than endowment with profit policies. On survival the insured receives money at regular Intervals during the term. the nominee receives the sum assured plus bonus upon death of the insured. The insured does not receive money while he is alive. Life insurance is all about making sure your family has adequate financial resources to make those plans and dreams come true. Annuities / Children’s policies – The nominee receives a guaranteed amount of money at a predetermined time and not immediately on death of the insured.LIFE INSURANCE : Your family counts on you every day for financial support. and much more. On survival the insured receives money at the same pre-determined time. food. Shelter. It provides financial protection to help your family or business to manage after your death. Money back policies – The nominee receives money immediately on death of the insured. These policies are best suited for planning children’s future education and marriage costs. The insured receives money on survival of the term and is not covered thereafter. transportation.

Since a single policy cannot meet all the insurance objectives. The policy is designed to cover the various risks under a single policy. Health Insurance – It provides cover. machinery and other tangible properties. Assets would have been created through the efforts of owner. Concepts of insurance have been extended beyond the coverage of tangible asset. GENERAL INSURANCE : Every asset has a value and the business of general insurance is related to the protection of economic value of assets. Now the risk of losses due to sudden changes in currency exchange rates.Pension schemes – There are policies that provide benefits to the insured only upon retirement. Personal Accident Insurance – This insurance policy provides compensation for loss of life or injury (partial or permanent) caused by an accident. If the insured dies during the term of the policy. This includes reimbursement of cost of treatment and the use of hospital facilities for the treatment. . Property Insurance – The home is most valued possession. which can be in the form of building. vehicles. which takes care of medical expenses following hospitalization from sudden illness or accident. one should have a portfolio covering all the needs. But if a person judiciously invests in insurance for his property prior to any unexpected contingency then he will be suitably compensated for his loss as soon as the extent of damage is ascertained. It provides protection for property and interest of the insured and family. negligence and liability for the damages can also be covered. his nominee would receive the benefits either as a lump sum or as a pension every month. political disturbance.

It has not only to frame was setup in 1996 but it was formally constituted as a regulator of the insurance industry in April 2000. as the regulator of the Indian Insurance industry. 1938. Insurance Regulatory and Development Authority (IRDA) The insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the business of insurance and re-insurance in India. The insurance Regulatory and Development Authority Act. There are two types of policy one covering the act of liability. Liability Insurance – This policy indemnifies the Directors or Officers or other professionals against loss arising from claims made against them by reason of any wrongful Act in their Official capacity. one should have a portfolio covering all the needs. IRDA Regulator and Development Authority as it was provided that it had broader role to perform in the Indian insurance market. 1999. Since a single policy cannot meet all the insurance objectives. The regulator was initially known as the insurance Regulator Authority but was subsequently . was enacted by Parliament in the fiftieth year of the Republic of India to provide for the establishment of an Authority to protect the interests of holders of insurance policies. 1956 and the General Insurance Business act. 1999. Motor Insurance – Motor Vehicles Act states that every motor vehicle plying on the road has to be insured. The Authority was constituted on April 19. 1972. IRDA was constituted in terms of the Insurance Regulatory and Development Authority Act.Travel Insurance – the policy covers the insured against various eventualities while traveling abroad. 2000. It covers the insured against personal accident. while other covers insurers all liability and damages caused to one’s vehicles. 277. with at least Liability only policy. the life Insurance Corporation Act. medical expenses and repatriation. vide Government of India’s notification No. passport etc. loss of checked baggage. promote and ensure orderly growth of the insurance industry and for matters connected there with or incidental there to and further to amend the insurance Act. to regulate.

their conduct of business.UK Lombard Tokyo marin. licensing. Thus. the objectives of IRDA are twofold: policyholder protection and healthy growth of the insurance market. IRDA has till 2001 issued seventeen regulations in the areas of registration of insurers. It 1. Indian partner HDFC Reliance Sundaram Max India Bajaj auto Kotak mahindra ICICI ICICI IFFCO Tata group Aditya birla group SBI Vysya bank Foreign partner Stander life UK No partner Royal & sun alliance New york life Allianz Old mutual south Prudential.rechristened as Insurance and issue statutory and regulator stipulations. and clarification but it has also to perform a developmental and promotional role. solvency margins. guidelines. and code of conduct intermediaries. conduct of reinsurance business. Follows the practice of prior consultation and discussion with various interest groups before issuing regulation and guidelines.USA Sun life Cardif france ING specialization Life Non-life Non-life life Non-life and life Life Life Non-lilfe Non-life Life. The following players have applied and some have got licenses and even started operations in India. non-life Life Life life Present status In operation Operation to begin shortly In operation In operation Applied for license Started operation In operation Applied for license Received license In operation In operation Received license Received license NUMBER OF REGISTRERED INSURERS IN INDIA .japan AIG.

Type of Public sector business Life insurance 01 General insurance 06 reinsurance total 01 08 Private sector 13 08 0 21 Total 14 14 01 29 MUTUAL FUND Definition What is mutual fund Characteristics Advantages Disadvantages Product types 22 22 24 25 26 27 .

bonds or other securities according to specific investment objectives that have been established for the fund. collected from investors. Principal Distributor: Co-ordinates the sale of the fund to investors. and existing investor can return their units or share to the fund for redemption at any time. What is Mutual Fund? A mutual fund is a pool of money that is managed on behalf of investors by a professional money manager.DEFINATION :Mutual Fund is a pool of money. the fund manager charges fees based on the value of the fund’s assets. When you redeem your units or shares of a mutual fund you will receive a cheque based on the current market value of the fund’s portfolio. markets them and oversees their general administration. In return for administering fund and managing its investment portfolio. meaning that new investors can contribute money to the fund at any time. The manager uses the money to buy stocks. . and is invested according to certain investment objective. Several parties are invoked in the organization and operation of a mutual fund. either directly or through a network of registered dealers. Mutual funds are ‘open-ended’ investment funds. The Mutual Fund Manager also often acts as the Portfolio Adviser. you’ll receive either units or shares that represent your proportional share of the pool of fund assets. In return for putting money into the fund. including: Mutual Fund Manager: Establishes one or more mutual funds. Portfolio Adviser: The professional money manager appointed by the Mutual Fund Manager to direct the fund’s investments.

Custodian: The bank or trust company appointed by the Mutual fund manager to hold all of the securities owned by the fund Transfer Agent and Registrar: The group responsible for maintaining a list of all investor in the fund. Auditor: The independent accountants retained by the Mutual Fund Manager to audit each year. Mutual funds can be classified as :1) closed-end funds 2) open-end funds 3) large cap funds 4) mid cap funds 9) exchange traded funds 10) value funds 11) money market funds 12) international mutual funds . Trustee: The entity that has title to the securities owned by the fund on behalf of the unit holders. and report on the financial statements of the fund.

The pool of funds is invested in a portfolio of marketable investments. manage a mutual fund. every day. Investment professionals and other service providers. The value of one unit of investment is called the Net Asset value or NAV. The investor’s share in the fund is denominated by ‘units’. A mutual fund actually belongs to the investors who have pooled their funds. The ownership of the mutual fund is in the hands of the investors. from the fund. 5. 3.5) equity funds 6) balanced funds 7) growth funds 8) no load funds 13) regional mutual funds 14) sector funds 15) index funds 16) fund of funds CHARACTERISTICS:1. The investment portfolio of the mutual fund is created according to the stated investment objectives of the fund. Who earn a fee for their services. . 4. The value of the units changes with change in the portfolio’s value. 2. The value of the portfolio is updated every day.

an investor may be holding a portfolio of funds. 9. 7. with the costs of monitoring them and using them. being incurred by him. Portfolio diversification Professional management Higher rate of return Reduction of transaction Liquidity Convenience and flexibility Disadvantages of mutual funds to investors 12. into which investors invest. They cannot create made portfolios. Managing portfolio of funds: As the number of mutual funds increases. 13. No tailor-made portfolios: Mutual fund portfolios are created and marketed by AMCs. No control over costs: Since investor do not directly monitor the fund’s operations they cannot the costs effectively. 8.Advantages of mutual funds investor 6. . 10. in order to tailor a portfolio for him. 11. 14. Regulators usually limit the expenses of mutual funds.

16. these funds are also known as income funds. There are varieties of ways in which an equity portfolio can be created for investors. 17. Since most debt securities pay periodic interest to investors. 18.Product types Equity funds Debt funds Balance funds Equity funds This fund is pre-dominantly in equity share of component. The universe of debt securities comprise of long-term instruments such as: 1. Simple equity funds: Primary market funds: Sectorial funds: Index funds: Debt funds Debt funds are those that pre-dominantly invest in debt securities. 2. 3. 15. Bond issues by central and state governments Public financial institutions and private sector companies Public sector organizations . However funds investing in debt products can also offer a growth option to their invertors.

. by bringing in debt. 1. 2.4. Similarly there are predominantly debt funds (over 70%in debt securities). Liquid funds & money market funds : Gilt funds : Simple debt funds : Sectoral debt funds : Balanced funds Funds that invest both in debt and equity markets are called balanced funds. Call money lending Commercial papers Certificates of deposit Treasury bills Debt funds tend to create a variety of option for investors by choosing one or more of these segments of the dent markets in their investment portfolio. 3. 7. 4. The variations are funds that invest pre-dominantly in equity (about 70%) and keep a smaller part of their portfolios indebt securities. to provide some growth potential their funds. 6. A typical balanced fund would an almost equally invested in both the markets. 5. which invest in equity. A balanced fund also tends to provide investors exposure to both equity and debt markets in one product. These funds seek to enhance the income potential of their equity component.

UNIT LINKED INSURANCE PLAN Introduction of ULIPs Overview of ULIPs Key features of ULIPs Benefits of ULIPs Expenses involved in ULIPs ULIPs plan comparison Should investor opt for ULIPs Five steps for selecting right ULIPs 30 31 33 34 38 39 45 46 .

The main different is in choice of investment . Policyholder has no say in the choice of investment. which are decided by the companies on his behalf. Insurance industry has also upgraded them by introducing marketing linked insurance plan. So unit linked insurance plans can be said the combination of characteristic of mutual fund and insurance. In addition non.this fund differ decides that risk exposure and appreciation.Introduction As the competition increases in insurance industry and more invstament avenues are available to investor.guaranteed bonuses in the from of share in the profits of the company may also be offered depending on whether the policy is participating policy or not. Mutual Insurance ULIPs .in unit linked insurance plan companies will generally offer combination of different product with different combination of debt-equity mix . The premium amount is fixed at the outset and the same quantum of premium needs to be paid throughout the term of policy.

As in all insurance policies. If you opt for a unit-linked endowment policy. The daily unit price is based on the market value of the underlying assets (equities. which has made the insurers slash payouts. investors could be left stung. Unit-linked life insurance products are those where the benefits are expressed in terms of number of units and unit price. 2. However. regular or variable. should the buzz die down. the majority of your premiums will get invested in debt securities like gilts and bonds. The advantages of unit linked plans are that they are simple. . Being transparent the policyholder gets the entire upside on the performance of his fund. the buzzing market could lead to windfall returns.Overview of ULIP Most insurers in the year 2004 have started offering at least a few unit-linked plans. The number of units. the risk charge (mortality rate) varies with age. investigating in a plan that has an equity tilt may not be a good idea. government securities etc. This is especially so if one also believes that current market values (stock valuations) are relatively low. a company offering unit linked plans must give the investor an option to choose among debt. Unit-linked products are exempted from tax and they provide life insurance. Premiums paid can be single. So if you are opting for a plan that invests primarily in equity. and easy to understand.one can afford you take the risk associate with equities. you can choose to invest your premiums in dent. They can be viewed as a combination of insurance and mutual funds. balanced and equity funds. which the customer would get. clear. The risk cover can be increased or decreased. Key Features of ULIPs 1. The payment period too can be regular or variable.) and computed from the net asset value. bonds. However. their short history does not permit an assessment of how they will perform in different phases of the stock market. balanced or equity plans. According to the IRDA. Investors welcome these products as they provide capital appreciation even as the yields on government securities have fallen below 6 percent. as one approaches retirement the quantum of return should be subordinated to capital preservation. at least in the plan’s initial stages. The ideal time to buy a unit-linked plan is when one can expect long-term growth ahead. would depend on the unit price when he pays his premium. At this stage. If you choose a debt plan. If one invest in a unit-linked pension plan early on . Considering that unit-linked plans are relatively new launches.say 25.

etc. ICICI prudential life insurance. typically 15 or 20 years.” says Stuart Purdy. unit-linked plans work like endowment plans-they combine insurance with investment. Investments can be made in gilt funds. 10. clear. for instance. 14. 7. The investment components of the premium is converted into unit-much like mutual fund premiums are unitized through the policy tenure. 11. 9. growth funds or bonds. Lead to an efficient utilization of a capital. balanced and equity funds. A part of the premium you pay goes towords buying you insurance cover and what’s left of the rest is invested in equitl and debt instruments. “One of the major advantages of unit-linked plans is that they are very transparent. an you want to move to a lower risk . The maturity benefit is not typically a fixed amount and the maturity period can be advanced or extended. The maturity benefit is the net asset value of the units. component in it as well. balanced funds. Investor gets an option to choose among debt. Insurance companies have the discretion to decide on their investment portfolios. Benefits Cover-plus:In a sense. The policyholder can switch between schemes. ULIP products are exempted from tax and they provide life insurance. They are simple.3. And information on this is put out regurarly by insurere. 8. “with these plans . The costs in ULIP are higher because there is a life insurance. and easy to understand. 6. 4. 12. Being transparent the policyholder gets the entire episode on the performance of his fund. managing director. money markets funds.you can choose a mix of asset classes for your investment chief actuary. Provides capital appreciation. balanced to debt or gilt to equity. in addition to the investment component. 13.this means that as your risk appetite changes with age. Aviva life insurance” Investment options:It is in the range of investment option that unt-linked plans offer that they stand apart from other insurance-cum-investment products. between once and four times a year free of cost . 5. Most insurers in fallow you to switch from one stream to another.

The second head. around 40 per cent (of the premium paid ) in the first two years .8 per cent in year 1 ( for a premium of Rs10. page: Although tax breaks aren’t by themselves reasons enough to decide on a choice of investments. On the other hand.accounts for the biggest components-typically. For instance. Tax breaks:The premiums you pay on unit-linked plans qualify for rebate under section 88. has an expense ratio of 16 per cent in the first year.” says Mysore.and fund management costs. Expenses:one area where unit-linked plans come in for widespread criticism related to the expenses that insurers charge under three broad heads :-mortality charges ( which goes towards paying for your insurance cover). ICICI prudential’s lifetime charges 19 per cent in the first technology in administration and management . For instance. with a three-year lock-in. upon investing Rs20.12. say.000 a year in the same plan for the sane tenure. classic life. the investment component shrinks to that extent-and Impacts your returns.) Among mutual funds. only equity-linked saving schemes offer section 88 rebate. you will pay 42.456) in the second year to 1. “ The rationale behind the high commissions is that unit-linked plans need greater level of advisory services . the investment tenure and the period beyond which withdrawals are permitted. general expenses(agent’s commissions and underwriting costs).9 per cent(or Rs 956) from the third year onwards. ( in the case on unit-linked pension plans . But in response to greater investor awareness about the high expense . Tenures:- .which comes down to 21. there’s no denying that tilt the balance in favour of unit-linked plans-even if you are financially savvy an feel equipped to manage your investments through. The actual expense structure may very from one product to another depending on. Since these expenses are deducted from the premium you pay. your expense structure scales back from 40. expense ratio of 69.appetite changes with age.9 per cent (or Rs 20. that works out to Rs 8. insurers have scaled back their expense structures in newer products.which goes down sharply in later years.000 a year). Rs 4.they qualify for deduction under section 80CCC. insurers are expected to lower these expense structure further.000 a year for 15 in TataAIG’s invest assure policy. insurers have scaled life’s new unit-linked plan. in rupee terms.9 per cent (or Rs 10. equity funds. if you invest Rs 50.460. the amount invested.3 per cent and 9.460 and Rs 660 respectively.8 per cent in the subsequent years.6 per cent. among other things. and you want to move a lower risk option secure your accumulations. general expenses . you can migrate your money to safer havens.456) in the first year to 20.3 per cent from the third year onwards .

typically Rs 10. But . staying invested for longer tenures offers returns that can match-and even better-equity funds . If you feel equipped to manage your investment on your own or are not comfortable with long lock-ins or you can’t make the most of these tax breaks. Under this. a private wealth management firm. single top-ups above RS 25. unit-linked plans don’t face redemption pressure. only if you factor in the income accruing from the additional investment of the section 88 drawback in PPF do the return from unit-linked plans fare better those from equity funds. On the other hand. You can then ‘to up’ from the second year onwards.” says Rajagopalan.6 lakh from the unit-linked plan even if you’re not eligible for section 88 rebate. you get tax-free return of Rs 8.3 lakh. over three. post-tax. ”says Rohit Sarin of client associates. you may be better off investing elsewhere after securing your life insurance needs. if you invest for 15 years. but if you are not financially savvy or have little time to monitor your investments and don’t have access to professional investment managers and still want marketlinked returns on your investment. For instance. the equity fund will only return Rs 8. you can keep your premium to the minimum required under the plan. a fund manager for a unit-linked product can. top-ups in the charges decline over the tenure. and over the years lets you divert more of your overall premium payout to the investment component.000 a year. (for instance.000 on Tata AIg’s invest assure policy invite a 1. On the other hand. Top-up strategy:One way of lowering your expense structure is by making imaginative use of the top-up provision that most insurers offer. And for those who don’t must perforce be 15 years or more for it to make financial sense. perform better in the long run. “unlike mutual funds.you may have to pay a fee for this the this facility. Are they for you? “unit-linked products are finally products of choice. by which time the expense ratio is much smaller.The heavy frontloading of expenses effectively acts as a disincentive for early withdrawals. therefore.) what this strategy lets you do is to lower your expense outgo in the early years (when they ere are very high).or five-year tenure. you might just want to savour the flavour of the season.for instance. unit-linked plans in most cases compare poorly with equity funds on pre-tax return. which is small if the top-up exceeds a threshold defined by the particular insurer. .5 per cent charge.

44% Clas Sic life 15.91 % 13.4 4% 16.0 0% 1.0 0% 3.36 % 47.60 % Life Mak er 46.0 0% 1.6 8% 18.80 % Unit Gain pluse 24.40% 0.2 0 % 4.68 % Ksi p 15.0 0 % 24.00 0% 0.00 % 47.44 % Hori zon 15.00% 1.2 0% 50.0 0% 21.36 % Future project 46.4 4% 16.0 0% 1.48 % Endow Ment Unit linked 27.00 % MET LIFE 16.9 1% .48 % 27.20 % Inve St Assu Re 50.00 % 0.Expenses involved in ULIP Policy Ici Ci pru Bir La Sbi Life Km Om Met Life Alli Anz Baj Aj Hdfc Icici Prude Ntial Ma x Ta Ta AIG Expense Charges In first Year Cost of life cover Adminis Trative charges Total Pre Mier life 12.0 0% 0.

If a person is wealthy or has no dependents. The overheads for the ULIP are higher compared to a mutual fund. 2. Balanced Fund. Bond Fund. part of the monthly premium is used to provided insurance cover for the person and the remaining amount is invested in the stock market. insurance premium are low. Secured Fund. 2. 188) Features:1. Most of the insurance companies offer attractive commissions to their agents for Unit Linked Insurance Plans (ULIP). 3. Unit Linked Endowment Plans from Life Insurance Corporation of India. so many people buy ULIPs without reading the print as theses is marketed aggressively by companies providing investor services. 4. so purchasing a term policy may be a better option. Growth Fund Unlimited switches (4 free switches per year) Accident benefit rider Critical illness rider (Profit Plus) . However. so the returns may be lower. 187) Profit Plus (T. Fortune Plus (T. no. Fortune Plus and Profit Plus from LIC:1. the buyer of ULIPs should also be prepared for negative returns when share prices fall.UNIT LINKED PLANS COMPARISION:In a ULIP. 3. At a young age (less than 30). no. insurance cover may not be required.

2. Past performance is not indicative of future results. premium can be paid in one installment or a number of installments over a period of up to 5 years. its future prospects or returns. 3. Minimum premium is Rs. The premium is limited to 5 years for Fortune Plus and is available for the age group 1260. It is available for persons up to 65 years.000 for single premium and Rs. Five year premium period Entry even at 70 Loyalty units every cover till age of 100 Premium paid in ULIPs are subject to investment risks associated with capital markets and the NAV of the units may go up or down based on the performance of the fund and factor influencing capital Markets and the insured are responsible for his decision. Invest Assure Gold from TATA AIG Life Insurance Company :(whole life unit linked insurance policy) Features:1. This product is underwritten by Tata AIG Life Insurance Company Limited. 10. 20. Premium paid in Unit Linked Life Insurance Policies are subject to investment risks associated with capital Markets and the NAV of the units may go up or down based on the performance of the fund and factor influencing capital markets and the insured responsible for his/her decisions.000 per annum for term policies.000. Tata AIG life insurance company limited is the name of the insurance company and invest Assure Gold is the name if the ULIP contract and does not in any way indicate the quality of the contracts. . Minimum premium payable in the first year is Rs. 20.For Profit Plus.

5. Protector IV. mid term option change allowed up to 4 times free of cost Funds available : Flexi Growth IV. which adjusts equity % automatically with age) Features:Unit linked insurance plan which adjusts the investment according to age 1. Preserver IV 7. Investments in ULIPs are subject to market risk.Life Stage RP from ICICI prudential life insurance :(Unit linked insurance policy. 8. Maximiser IV. Balancer IV. Flexi Balanced IV. 4. 100 % fund value paid on surrender from 5th policy year New fund opens at Rs 10 on August 25.000 p. terms and conditions are available in sales brochure. Details of risk factor. equity % is higher initially and reduces close to the retirement age.a Option : Life cycle based and fixed portfolio. 2. Horizon II pension from SBI life :Unit linked insurance policy (ULIP). the debt equity component is periodically adjusted Available in select cities Age at entry : 18-75 years Minimum premium : Rs 15. 6. Based on the age of the person. Features :- . 3. 2007 1.

:[Unit linked insurance policy (ULIP)] 12. 11. 14. lus Gold from Tata AIG. it cannot be changed. For Dynamic plan. but the initial equity component is ever lower. Risk factors / warning statements:Unit gain Plus Gold is a Unit Linked insurance Pla(ULIP). Based on the age of the person. 15. 9. Funds available : Equity pension. Growth plan is similar to dynamic plan.a Option : Dynamic plan and Growth plan.1. 100% fund value paid on surrender from 4th policy year onward. bond pension and money market pension funds. ures:- 16. the equity investment decreases gradually to 0-15% at the end of the 20 year term and the investment in bonds increases. 8. 13.000 p. As the person ages.2 Lakh for a policy taken at age 25 with a premium of Rs 2000 per month. Once a dynamic or growth plan is selected. 7. 80-100% of the funds will be invested in equity markets initially and the remaining amount in bonds or the money market. Minimum premium : Rs 12. 5. 2. top-ups and switches Tax savings under section 80C and 80D of prevailing income tax regulations. Insurance cover of Rs 4. 10. High allocation up to 85% UL waiver of premium and UL family income benefit Flexibility with premiums. . 6. the debt equity component is periodically adjusted Age at entry : 18-60 year. Unit linked insurance plan which adjusts the investment according to age. 3. 4.

Investment in ULIPs is subject to risks associated with capital market. 2. its future prospects or returns. Bajaj Alliance Life Insurance and Unit Gain Plus Gold are only the name of the insurance company and the product respectively and does not in any way indicate the quality of the products. 4. 5. 3. The policy holder is solely responsible for his/her decisions while investing in ULIPs. Guarantees return of up to 175% of first year’s premium Invest up to 100% of all subsequent premiums Partial withdrawals allowed Premium holiday option Flexibility to switch between investment funds . Aspire life from Bharti Axa life insurance:[unit linked insurance policy (ULIP)] Features (claimed by the company) 1.

the structure of a ULIP takes care of quite a bit of the uncertainty in the markets. for investors to make the right switch they need to track markets actively and be well informed. Understand the concept of ULIPs:- . ‘A ULIP policyholder has the option to invent in a variety of funds. HDFC standard life allows policyholder to make as many switches as they like. The volatility in equity markets can disturb the calmest of minds and the last thing you want to see is your nest egg being eroded by the latest slide in equity markets. While it is fine and even sensible to let your investable assets get an equity flavor. We present a 5-step strategy for investing in ULIP s. 1. There is an option for the insurance-seeker to switch to another plan with a lower or zero equity components to stem the loss in a falling equity market. Very often it was poor selection that was responsible for the investors’ woes. thereby making adjustments to any perceived risks. However. So if you have a ULIP invested in equities. FIVE STEPS FOR SELECTING RIGHT ULIP Unit linked insurance plans (ULIP s) were seen as a “wonder product” that simultaneously fulfilled an individual’s needs for investments and insurance to do a rethink. ULIPs are suitable for individuals who are already adequately insured and are reasonably well-informed and savvy to take active investment decisions by using the ‘switch option’ that is provided to a ULIP policyholder.’ However.Should Investors opt for ULIPs? First and foremost. you are exposing your life insurance monies as well as your investable surplus to the vagaries of equity markets. which to a large extent should be scared. they can choose a debt or balanced fund. which is actually the job of the investment advisor/consultant. they can make this options work.’ Tata AIG allows policyholder to make this switch four times a year at no cost. Insurance companies understand the need to give insurance-seekers the flexibility to rethink their investment strategy in view of market histrionics. So if insuranceseekers/investors play their cards right. Ideally they need to avoid taking the aggressive 100% equity ULIP. Also policyholder with regular endowment plans who are not satisfied with the 4-6% returns can consider taking a ULIP with a lower equity component. ‘The switch option allows customers to switch between fund option. Experts’ points out. which could needlessly expose their assets to market volatility. investors need to understand that a ULIP is a bundled product of their investment and their insurance proceeds. An expert elaborates. If one does not have the appetite to invest in equity. the same cannot be said about your life insurance monies. with Rs 100 at every additional switch after that. It is best if insurance-seekers tread the middle path and choose balanced plans (with about 50-60% equity component). depending on his risk profile.

Enquire about the number of times you can make free switches (i. Compare ULIP s of different insurance companies:Compare products of the leading insurance companies. The companies give you the option to increase the premium amounts. Opting for a plan that is lop-sided in favor of equities when you are a risk-averse individual might spell disaster for you (this is true in most cases currently). 4. Go for an experienced insurance advisor:Select an advisor who is not only professional and informed. This way you will know what you are getting into and won’t be faced with unpleasant surprises at a later stage. thereby providing you with the opportunity to gainfully utilize surplus funds at your disposal.e. 3. Also enquire whether he has serviced clients like you. Your risk appetite should play an important role in the plan you choose. When your agent recommends a ULIP of X company ask him a few product-related questions o him and ask him also why the other products should not be considered . change the asset allocation of the money in your ULIP account) from one investment plan to another.Try to do as much homework as possible before investing in an ULIP. Check the fund’s performance over the past six months. Our experience suggests that many a time people do not realize what they are getting into (in fact we have been approached by several people who wanted to cancel the ULIP s they had been coerced into talking by unscrupulous agents). Ask about the top-up facility offered by ULIP s i. So if you have a high-risk appetite. Find out how the debt and equity schemes are performing and how steady the performance has been. Focus on your requirements and risk profile:Identify a plan that is best suited for you (in terms of allocation of money between equity and debt instruments). go in for a more aggressive investment option and vice-a-versa. Some insurance companies offer you free switch for a 2-yr period while others do so only for 1 year. the various options available and understand their working. Enquire about the premium as ULIP s work on minimum premium basis as opposed to sum assured in the case of conventional insurance policies. 2. Gather information on ULIP s. but also independent and unbiased. In UPIL s the costs involved are a big deciding factor.e. Read the literature on ULIP s on the websites and brochures circulated by insurance companies. Enquire about the charges you will have to pay. additional lump sum investments you can make to increase the savings portion of your policy.

expertise and the technology through which the actual game is played makes the winning easier. To know basic mechanism of ULIPs and Mutual Fund. 10. Mutual Fund is an instrument which helps in the measuring the risk. So knowing about the risk and the proficiency. Other Objectives 6. To know evolution and growth of insurance sector. Unit Linked Insurance plan is like to invest your money in mutual funds as a safer side with covering your life insurance and that keeps your investment moving and maximize your financial level of return. To understand the criteria for investment in ULIPs. Even a small and a simple game to be played needs proper and accurate knowledge. 7. RESEARCH & CONCLUSION Research Objectives Study of Unit Linked Insurance Plan as an investment option in Mutual Funds is of major importance to the financial markets as well as finds the net Asset value of the insurance. it would be a huge advantage. His job should not just begin by filling the form and end after he deposits the check and gives you the receipt. Does your ULIP offer a minimum guarantee? In market linked product if your investment’s downside can be protected.Insurance advice at all times must be unbiased and independent and your agent must be willing to inform you about the pros and cons of buying a particular plan. and compared to that this is very vital market having very wide scope of getting returns. 8. 9. To identify market potential of ULIPs as a part of investment in Mutual fund Comparative analysis of ULIPs of Tata AIG with other competitive plans. The key is to do for an advisor who will offer value-added products. 5. The main aim of this report is to study the mechanism of mutual fund and ULIPs in the emerging sector of the capital market. Find out if the ULIP you are considering offers a minimum guarantee and what costs have to be borne for the same. . skill. 11. But without having the proper and inadequate knowledge in the market one can’t get proper return but can get secure his life with life insurance. He should keep a track of your plan and inform you on a regular basis. This will enable you to make an informed choice.

Primary Data Collection Secondary Data Collection Primary Sources of Data :- Primary data may pertain to demographic. their he main methods. 12. there are two sources of data. sales rt. awareness and other similar as Secondary Sources of Data :- Secondary data are those data. socio. RESEARCH FINDING Potentiality in the insurance sector .economic haracteristics of consumers. attitudes and opinions of people. which are collected from earlier research work and application as well as usa tudy of research. for obtaining primary data are as under. 13. which are used. the next stage is that of selecting sources of data.Research Methodology SOURCE OF INFORMATION ata Collection Methods Once the research design has been decided. nal data External data can be collected from the web site. I can’t use any internal primary data. naws paper and so on. Essentially. production report. There are mainly two types of secondary sources of data and they are: Types of secondary Data al It includes various internal reports prepared by the firm like. magazines.

D. .PPF and other fixed return securities.Number polices in forces 20 18 16 14 12 10 8 6 4 2 0 1999 2000 2002 2004 2006 2008 2010 GDS% Year Life premium as a proportion of gross domestic savings About investment pattern 80 70 60 50 40 30 20 10 0 gov sha insu mu If has been found out that out of survey only 20% people were investing in mutual funds. And majority of people were investing in F.

Adequate insurance=(54 years-present age)*yearly income .About mutual funds About insurance First of the respondents were asked that whether they are having insurance or not then it was explained that what is adequate or not on the basis of below formula.

Unit linked insurance plans During the survey it was asked to respondents that whether they know about marked linked plans which provides insurance cover and returns. All the data’s collected are secondary. So the scope for collecting this data is very wide. most of them knew little about the plans. the data are collected from internet. Research scope The information given in research findings is collected by data collection method. . Recommendations 14. In insurance it was found out that most of the people did not know the benefits of ULIPs so first of all company should explain the benefits of ULIPs to the customers. magazines and newspaper.

Premium paid under these plans is eligible for tax act. Though mutual funds too have entry exit loads (maximum 2 per cent) and expenses (maximum 2. .15. these costs are lower than unit-linked plans. CONCLUSION Both these instruments are designed to serve different purpose and are not comparable. Even if one redeems after three years. Finally is a deduction for risk cover. Private companies have to create awareness of not only those products which will be mare beneficial to them but all products. mutual funds are investments avenues to participate in the growth of financial markets and do not provide any tax deduction (except ELSS and pension funds). There is a lock-in of three years.5 per cent). unit-linked plans are not as liquid as mutual funds.8-1. So company should make them convince about the benefits of private companies and about the products which are more flexilbe. On the other hand. People know the options available for the investment but they don’t know which option will be best suited for them. the upfront charges for the first two premium amounts are as high as 20-27 percent.25 percent and a flat fee of Rs15-20 per month. Moreover. Then there is an annual management fee of 0. A unit-linked plan from an insurance company is in an insurance policy designed to pay a lump sum on maturity or on death if earlier. 17. which is based on mortality rates as calculated by actuaries. This goes to the sum assured or the life insurance cover. 16. In some cases people didn’t have the faith it private companies. For example. you would be at a loss because of higher initial administrative charges.

tataaing. www. 3.in www.com. 5. 4.iloveindia.Bibliography Magazines Business Word (October 2001) Business today (June 2001) Business Today (April 2005) Business India ( May 2004) Websites 1. 6.com www.moneycontrol.com www.com cccwww.mutualfundsindia.com www.traderji. www.karvy.gov.com . 7. 2.Sebi.

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