EXECUTIVE SUMMARY

Overall, the life insurance and pension sector is set for rapid changes and growth in the years

ahead. Delivering service, building trust and being innovative are key areas in which any

company will have to excel in order to do well in the long road ahead. Different companies

will take different approaches and it would be myriad of solutions that will be found to delight

the Indian customer.

During the first part, I was given complete classroom training about the various unit linked as

well as the traditional plans and solutions which the company offers.

Later, Market Research was done through various activities and tele-calling which are

discussed further in the report. Activities led to practical exposure and taught me the aspects of

customer dealing.

Finally, interesting conclusions were drawn out of the data collected regarding the Awareness

of Financial Planning among the people in today’s environment.

It was great experience because selling an insurance product demands a great deal of

confidence and product knowledge.

 INDUSTRY PROFILE

Overview

With largest number of life insurance policies in force in the world, Insurance happens to

be a mega opportunity in India. It’s a business growing at the rate of 15-20 per cent

annually.

Together with banking services, it adds about 7 percent to the country’s GDP .In spite of

all this growth the statistics of the penetration of the insurance in the country is very

poor. Nearly 80 per cent of Indian population is without life insurance cover while health

insurance and non-life insurance continues to be below international standards. And this

part of the population is also subject to weak social security and pension systems with

hardly any old age income security. This it-self is an indicator that growth potential for

the insurance sector is immense.

Historical Perspective

The insurance came to India from UK; with the establishment of the Oriental Life insurance

Corporation in 1818.The Indian life insurance company act 1912 was the first statutory body

that started to regulate the life insurance business in India. By 1956 about 154 Indian, 16

foreign and 75 provident firms were been established in India. Then the central government

took over these companies and as a result the LIC was formed. Since then LIC has worked

towards spreading life insurance and building a wide network across the length and the breath

of the country.
Important milestones in the life insurance business in India:

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

insurance business.

1956: 245 Indian and foreign insurers and provident societies were taken over by the central

government and nationalized. LIC formed by an Act of Parliament- LIC Act 1956- with a

capital contribution of Rs.5 cr. from the Government of India.

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.

1972: The general insurance business in India nationalized through The General Insurance

Business (Nationalization) Act, 1972 with effect from 1st January 1973. 107 insurers

amalgamated and grouped into four companies- the National Insurance Company Limited, the

New India Assurance Company Limited, the Oriental Insurance Company Ltd. and the United

India Insurance Company Ltd. GIC incorporated as a company.

 Insurance Sector Reforms

Prior to liberalization of Insurance industry, Life insurance was monopoly of LIC.

In 1993, Malhotra Committee- headed by former Finance Secretary and RBI Governor R.N.

Malhotra- was formed to evaluate the Indian insurance industry and recommend its future

direction. The Malhotra committee was set up with the objective of complementing the reforms

initiated in the financial sector. The reforms were aimed at creating a more efficient and

competitive financial system suitable for the requirements of the economy keeping in mind the

structural changes currently underway and recognizing that insurance is an important part of

the overall financial system where it was necessary to address the need for similar reforms. In

1994, the committee submitted the report and some of the key recommendations included:

Structure

Government stake in the insurance Companies to be brought down to 50%. Government should

take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as

independent corporations.

Competition

Private Companies with a minimum paid up capital of Rs.1 billion should be allowed to enter

the sector. No Company should deal in both Life and General Insurance through a single

entity. Foreign companies may be allowed to enter the industry in collaboration with the

domestic companies.
Regulatory Body

The Insurance Act should be changed. An Insurance Regulatory body should be set up.

Controller of Insurance- a part of the Finance Ministry- should be made independent

Investments

Mandatory Investments of LIC Life Fund in government securities to be reduced from 75% to

50%. GIC and its subsidiaries are not to hold more than 5% in any company (there current

holdings to be brought down to this level over a period of time)

Customer Service

LIC should pay interest on delays in payments beyond 30 days. Insurance companies must be

encouraged to set up unit linked pension plans. Computerization of operations and updating of

technology is to be carried out in the insurance industry.

 STATISTICS (INDIAN & GLOBAL)

This section gives the users important and detailed statistics of the Indian as well as the Global

insurance industry. These statistics would give important insights of where the respective

markets are headed for.

 The global life insurance market stands at $1,521.2 billion while the non-life insurance

market is placed at $922.4 billion.

 The United States itself accounts for about one-third of the $2443.6 billion global

insurance market and Japan stands next with a 20.62% share.

 India takes the 23rd position with US $9.933 billion annual premium collections and a

meager 0.41% share.

 Out of one billion people in India, only 35 million people are covered by insurance.

 India's life insurance premium as a percentage of GDP is just 1.77 per cent.

 The income derived by GIC and its subsidiary companies through investment was

Rs.2491.76 crore and the investable fund generated was Rs.2843 crore in 1999-2000.

 Indian insurance market is set to touch $25 billion by 2010, on the assumption of a 7

per cent real annual growth in GDP.

 NATURE OF INDUSTRY

The insurance industry provides protection against financial losses resulting from a variety of

perils. By purchasing insurance policies, individuals and businesses can receive reimbursement

for losses due to car accidents, theft of property, and fire and storm damage; medical expenses;

and loss of income due to disability or death.

The insurance industry consists mainly of insurance carriers (or insurers) and insurance

agencies and brokerages. In general, insurance carriers are large companies that provide

insurance and assume the risks covered by the policy. Insurance agencies and brokerages sell

insurance policies for the carriers.

Insurance companies assume the risk associated with annuities and insurance policies and

assign premiums to be paid for the policies. In the policy, the companies states the length and

conditions of the agreement, exactly which losses it will provide compensation for, and how

much will be awarded.

The premium charged for the policy is based primarily on the amount to be awarded in case of

loss, as well as the likelihood that the insurance carrier will actually have to pay. In order to be

able to compensate policyholders for their losses, insurance companies invest the money they

receive in premiums, building up a portfolio of financial assets and income-producing real

estate which can then be used to pay off any future claims that may be brought.
There are two basic types of insurance carriers: Direct and Reinsurance.

Direct carriers are responsible for the initial underwriting of insurance policies and annuities,

while Reinsurance carriers assume all or part of the risk associated with the existing

insurance policies originally underwritten by other insurance carriers.

Direct insurance carriers offer a variety of insurance policies.

Life insurance provides financial protection to beneficiaries—usually spouses and dependent

children—upon the death of the insured.

Disability insurance supplies a preset income to an insured person who is unable to work due

to injury or illness

Health insurance pays the expenses resulting from accidents and illness.

An Annuity (a contract or a group of contracts that furnishes a periodic income at regular

intervals for a specified period) provides a steady income during retirement for the remainder

of one’s life.

Property-casualty insurance protects against loss or damage to property resulting from

hazards such as fire, theft, and natural disasters.

Liability insurance shields policyholders from financial responsibility for injuries to others or

for damage to other people’s property. Most policies, such as automobile and homeowner’s

insurance, combine both property-casualty and liability coverage. Companies that underwrite

this kind of insurance are called property-casualty carriers.

 What is Life Insurance?

Human life is subject to risks of death and disability due to natural and accidental causes.

When human life is lost or a person is disabled permanently or temporarily, there is a loss of

income to the household. The family is put to hardship. Risks are unpredictable.

Death/disability may occur when one least expects it. There are a number of life insurance

products which offer protection and also coupled with savings.

A Term insurance product provides a fixed amount of money on death during the period of

contract.

A Whole Life insurance product provides a fixed amount of money on death.

An Endowment Assurance product provided a fixed amount of money either on death during

the period of contract or at the expiry of contract if life assured is alive.

A Money Back Assurance product provides not only fixed amounts which are payable on

specified dates during the period of contract, but also the full amount of money assured on

death during the period of contract.

An Annuity product provides a series of monthly payments on stipulated dates provided that

the life assured is alive on the stipulated dates.

A Linked product provides not only a fixed amount of money on death but also sums of

money which are linked with the underlying value of assets on the desired dates.
There are a variety of life insurance products to suit to the needs of various categories of

people—children, youth, women, middle-aged persons, old people; and also rural people, film

actors and unorganized laborers.

Life insurance products could be purchased from registered life insurers notified by the IRDA.

Insurers appoint insurance agents to sell their products.

As per regulations, insurers have to give the various features of the products at the point of

sale. The insured should also go through the various terms and conditions of the products and

understand what they have bought and met their insurance needs. They ought to understand the

claim procedures so that they know what to do in the event of a loss.

 INDIAN INSURANCE SECTOR

REGULATORY BODY

Insurance is a federal subject in India. The primary legislation that deals with insurance

business in India is: Insurance Act, 1938, and Insurance Regulatory & Development Authority

Act, 1999.

The Insurance Regulatory and Development

Authority (IRDA)

Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament

in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has

fastidiously stuck to its schedule of framing regulations and registering the private sector

insurance companies.

The other decision taken simultaneously to provide the supporting systems to the insurance

sector and in particular the life insurance companies was the launch of the IrDA’s online

service for issue and renewal of licenses to agents. Since being set up as an independent

statutory body the IRDA has put in a framework of globally compatible regulations.

MISSION-IRDA

“To protect the interests of the policyholders, to regulate, promote and ensure orderly

growth of the insurance industry and for matters connected therewith or incidental

thereto.”
 IMPACT OF LIBERALISATION

The introduction of private players in the industry has added to the colors in the dull industry.

The initiatives taken by the private players are very competitive and have given immense

competition to the on time monopoly of the market LIC. Since the advent of the private players

in the market the industry has seen new and innovative steps taken by the players in this sector.

The new players have improved the service quality of the insurance. As a result LIC down the

years have seen the declining phase in its career. The market share was distributed among the

private players. Though LIC still holds the 79% of the insurance sector but the upcoming

natures of these private players are enough to give more competition to LIC in the near future.

LIC market share has decreased from 95% (2002-03) to 81 %( 2004-05).

LIC has the current market share of 79%.

Among the private players ICICI Prudential has the maximum of appx. 5.60%

Followed by Bajaj Allianz (3.27 %) and HDFC Standard Life of about 3.11%.

Below is the table that shows the market share of various players of the industry.
The following companies

have the rest of the market

share of the insurance

industry.

COMPANY NAME MARKET SHARE

LIC 79.30
ICICI PRUDENTIAL 5.63
BAJAJ ALLIANZ 3.27
HDFC STANDARD LIFE 3.11
BIRLA SUNLIFE 2.32
TATA AIG 1.45
SBI LIFE 1.24
MAX NEWYORK 0.90
AVIVA LIFE 0.82
ING VYSYA 0.66
OM KOTAK LIFE 0.54
AMP SANMAR 0.38
METLIFE 0.33
RELIANCE LIFE 0.05

The liberalization of the Indian insurance sector has opened new doors to private competition

and the new and improved insurance sector today promises several new job opportunities. With

private players now in the field, there will be innovative products, better packaging, improved

customer service, and, most importantly, greater employment opportunities.

 Business Performance As On 31-03-12
Premium
s.no. Company NOP
(Cr)
1. LIC 23899.29 32,143,891
2. ICICI Prudential 3925.21 1,889,835
3. Bajaj Allianz 3027.55 1,905,767
4. HDFC standard 1220.85 363,322
5. SBI Life 1198.83 480,065
6. Max New York 752.84 544,121
8. Reliance Life 687.86 432,684
9. Aviva 656.91 293,382
10. Tata AIG 518.88 406,265
11. OM Kotak 499.34 159,101
12. ING Vysya 418.00 227,342
13. Met LIFE 302.67 116,988
14. Shriram Life 87.26 76,198
15. Sahara Life 19.70 35,636
16. Bharti Axa Life 7.75 5,220
There are a number of options to choose from for a career in Insurance. Ideally an

insurance company will have openings in the following fields:

 Actuaries

 Underwriter

 Surveyor

 Investment

 Marketing & Distribution

Actuaries

 Evaluates the risk for companies to be used for strategic management decisions.

 Actuaries use their analytical skills to predict the risk of writing insurance policies

through the use of mathematical, statistical and economic models.

 An actuary not only fixes the premium rates for new products, but also revises both

products and prices. They calculate costs to assume risk

Underwriters

 Insurance underwriters review insurance applications and decide whether they should

be accepted or rejected based on the degree of risks involved in insuring the people or

objects of concern.

 In the life insurance business, an underwriter is expected to filter the "bad or

substandard lives". Whereas, in the general insurance segment, he takes care of risk

management.
Agents/Brokers:

 Insurance agents may work for one insurance company or as independent agents selling

for several companies.

 Insurance agents and brokers can find openings in the health insurance sector, financial

planning services, retirement planning counseling or even provide other services, for

e.g. sell mutual funds, annuities etc.

Surveyor/Loss Assessor:

 Surveyors are professionals who assess the loss or damage and serve as a link between

the insurer and the insured.

 They usually function only in non life business.

 Their job is to assess the actual loss and avoid false claims.

Sales/Marketing:

And who can forget the guys who make and break a brand. They would be required in a

large number in order to promote the number of products that will be launched by

numerous companies in the insurance sector.

CURRENT SCENARIO OF THE INDUSTRY

INSURANCE MARKET IN INDIA

India with about 200 million middle class household shows a huge untapped potential for

players in the insurance industry. Saturation of markets in many developed economies has

made the Indian market even more attractive for global insurance majors. The insurance sector

in India has come to a position of very high potential and competitiveness in the market.

Innovative products and aggressive distribution have become the say of the day. Indians, have

always seen life insurance as a tax saving device, are now suddenly turning to the private

sector that are providing them new products and variety for their choice. Life insurance

industry is waiting for a big growth as many Indian and foreign companies are waiting in the

line for the green signal to start their operations. The Indian consumer should be ready now

because the market is going to give them an array of products, different in price, features and

benefits. How the customer is going to make his choice will determine the future of the

industry.

INSURANCE SERVICE

Consumers remain the most important centre of the insurance sector. After the entry of the

foreign players the industry is seeing a lot of competition and thus improvement of the

customer service in the industry. Computerization of operations and updating of technology

has become imperative in the current scenario. Foreign players are bringing in international

best practices in service through use of latest technologies. The one time monopoly of the LIC

and its agents are now going through a through revision and training programs to catch up with

the other private players. Though lot is being done for the increased customer service and
adding technology to it but there is a long way to go and various customer surveys indicate that

the standards are still below customer expectation levels.

DISTRIBUTION CHANNELS

Till date insurance agents still remain the main source through which insurance products are

sold. The concept is very well established in the country like India but still the increasing use

of other sources is imperative. It therefore makes sense to look at well- balanced, alternative

channels of distribution.

LIC has already well established and have an extensive distribution channel and presence. New

players may find it expensive and time consuming to bring up a distribution network to such

standards. Therefore they are looking to the diverse areas of distribution channel to have an

advantage. At present the distribution channels that are available in the market are:

• Direct selling/Retail

• Corporate agents

• Group selling

• Brokers and cooperative societies

• Bancassurance

DIRECT SELLING/RETAIL

Direct selling or retail business is carried out by Agents of the company. This is the main

distribution channel due to the complexity of most insurance products (Endowment,

Whole of Life, Unit Linked). This tends to be the focus of most companies due to its past

success as well as its ability to deliver the right advice. However, this channel can be

expensive and it is a time consuming sales process. An agent is the public face of an Insurance
company. Hence it is important that this face is always smiling and presentable and the facts

and figures at his/ her command are updated and correct.

An agent should be a pleasing personality with complete knowledge about the various plans

and solutions which the company has to offer and must also understand the customer’s

psychology well to deal in an efficient manner.

BANK ASSURANCE

Banc assurance is the distribution of insurance products through the bank's distribution

channel. It is a phenomenon wherein insurance products are offered through the distribution

channels of the banking services along with a complete range of banking and investment

products and services. To put it simply, Bancassurance, tries to exploit synergies between both

the insurance companies and banks.

Advantages to banks

 Productivity of the employees increases.

 By providing customers with both the services under one roof, they can Improve overall

customer satisfaction resulting in higher customer retention Levels.

 Increase in return on assets by building fee income through the sale of Insurance products.

 Can leverage on face-to-face contacts and awareness about the financial Conditions of

customers to sell insurance products.

 Banks can cross sell insurance products e.g.: Term insurance products with loans.
Advantages to insurers

 Insurers can exploit the banks' wide network of branches for distribution of products.

The penetration of banks' branches into the rural areas can be utilized to sell products in

those areas.

 Customer database like customers' financial standing, spending habits, investment and

purchase capability can be used to customize products and sell accordingly.

 Since banks have already established relationship with customers, conversion ratio of

leads to sales is likely to be high. Further service aspect can also be tackled easily.

Advantages to consumers

 Comprehensive financial advisory services under one roof. i.e., insurance services

along with other financial services such as banking, mutual funds, personal loans etc.

 Enhanced convenience on the part of the insured

 Easy accesses for claims, as banks are a regular go.

 Innovative and better product ranges

WHAT DOES LIFE INSURANCE HAVE TO OFFER?

Life insurance is many different things to many different people. For some, it is a premium to

be paid on time. For others it offers liquidity since cash can be borrowed when needed. For the

investment-minded, it denotes a constantly growing capital account and numerous other

benefits. 

The contractual guarantee is the promise to pay, backed by one of the oldest and most stably

regulated financial industry operating in the Indian sub-continent today.

1) Insurance Buys Time and Money

People like to refer to life insurance as time insurance, the reason being that life insurance

proceeds are paid to the insured's beneficiaries in case of death. The money proffered by life

insurance helps buy time to adjust to the change of circumstances. Insurance provides large

amounts of cash that will keep the lifestyle for the survivors the way it was before the insured's

death.

2) Insurance Offers Peace of Mind

For the person who buys an insurance policy, it offers absolute and complete peace of mind.

He or she knows that the decision made by him will provide sound benefits in the future,

whether or not the individual may live to see it.

3) Multiple Applications

The future is uncertain for each and every one. No one knows how long he or she will live. The

investment benefit is paid to the insured's beneficiaries after his death or it can be used during

the life as well. Life insurance policy owners can turn to the cash value of the policy in case of

a financial emergency when all avenues are either blocked or denied.

4) Enduring Elasticity

Since life insurance is flexible enough to serve several needs, the insured can keep several

long-term goals in mind once he or she invests in the insurance plan. The cash value of the

policy can be allocated towards augmenting the monthly income during the retirement years.

Leisure years should be turned into pleasure years. Permanent life insurance is designed on the

concepts of long-term flexibility.

5) Financial Security

The insurance policy offers contractual guarantees to people looking for peace of mind when

they buy life insurance. Life insurance offers complete financial security. The purchase of life

insurance demonstrates concern for a family's future financial well being.

6) Regard for Family

The purchase of life insurance clearly displays care and concern for the people the policy

owner loves.
7) Insurance is Safer

No financial institution can do what life insurance does. No industry can back its products with

reserves and surplus as sound as those of the insurance industry.

The proof of strength and safety that insurance companies have ensured even under the most

adverse of conditions is a matter of pride for the entire insurance industry. For generation after

generation, life insurance has been acclaimed as the very benchmark of security against which

the other industries are measured.

OPPORTUNITIES FOR INSURANCE COMPANIES

In the now open sector on insurance, the following is what I feel will determine the success of

the company in particular and the industry in general:

 A change in the attitude of the population

Indians have always been wary of employing their hard-earned money in a venture that will

pay them on their death. Insurance has always been used as a Tax saving tool. No more, no

less. It is upon the insurers to educate the people to secure/insure their future against any

unknown calamity and make a shield around their families and businesses.  

 An open and transparent environment created under the IRDA.

The reason for this being on the top of our understanding is that when ever we have seen any

sector open up in India there are always grey areas and unsure policies. These are not exactly

what any player, be it Indian or foreign, looks for. It creates an air of uncertainty in all the

decision making process. Insurance as a sector requires players who are strong financially and

are willing to wait for returns. Their confidence can be bolstered only if there is an open and a
transparent policy guidelines. This will also help the consumers feel safe that the regulatory is

an active one and cares to do everything possible to keep things under control and help the

insurance environment grow maturely.  

 A well-established distribution network.

To cater to the largest democracy in the world is by no means a cakewalk. Insurance profits are

directly related to number of insured and this is in turn related to the reach.

 Trained professionals to build and sell the product.

It is said that the insurance agent is the best salesman in the world. He makes you pay,

regularly, an amount promising to pay back only on your death. Thus the players will require

an excellent sales team to sell their products in the now competitive environment. 

 Encouragement of new and better products and letting the hackneyed

ones die out.

This will itself ensure the market grows. And that every class/society gets a product that best

suits them.

SPECIAL PROVISIONS

The Income Tax Act and Life Insurance policies

 Under Section 10(10D), any sum received under a Life Insurance policy (not being a Key

Man policy) is also exempt from taxation. But it is wise to remember that Pensions

received from Annuity plans are not exempted from Income Tax.

 Section 80C provides a deduction up to Rs.1,00,000/-  to an individual assesses for any

amount paid as a premium. 

POLICYHOLDERS GRIEVANCES

Policyholders may have complaints against insurers either in respect of their policies or their

claims. As per Regulations for Protection of policyholders’ interests, 2002, every insurer

should have in place, a grievance redressal system to address the complaints of policyholders.

The IRDA has a Grievance Redressal Cell which plays a facilitative role by taking up

complaints against insurers with the respective companies for speedy resolution. The IRDA

however does not adjudicate on complaints.

 Marketing Strategy of Ulip Plans

Insurance companies are in a unique position when it comes to marketing. They have no
tangible products to sell, but must instead rely on strong relationships with loyal customers and
word of mouth to help them compete. Still, despite the challenges, the marketing strategies for
insurance companies are really no different than for any other company, and require a strong
focus on the basics of effective marketing.

Know the Market

First and foremost, insurance companies must know their market. This means having a strong
understanding of their target audience, their competition and the most effective ways to
connect with that audience, according to Lin Grensing-Pophal, author of "Marketing With the
End in Mind." Competition is fierce, but service organizations like insurance agencies that
thoroughly understand the needs and concerns of their target audience can effectively motivate
that audience to connect with them.

Establish a Plan
Successful marketers don't just go out and "do things." Based on their knowledge of
the market, and their overall goals and objectives, successful marketers identify and
prioritize the communication strategies most likely to generate the results they need. This
generally involves a combination of activities that include both traditional and new media,
direct and indirect sales.

Measure Effectiveness
It is important for insurance companies to measure the effectiveness of their marketing efforts
based on the goals they have established. This may be as simple as comparing the number of
clients before and after a campaign. It may also involve using online analytics to monitor
website visits after launching a promotion.For insurance marketers, word of mouth is key. In
addition to measuring the effectiveness of marketing efforts based on quantitative data,
insurance marketers can seek input from their existing and new clients about their
communication efforts. What worked well? What was unclear? How might they communicate
more clearly in the future? In addition, clients can be excellent advocates and part of the
marketing process. Successful insurance marketers will take advantage of the opportunity to
leverage their clients as word-of-mouth marketing advocates.

The first ULIP was launched in India in 1971 by Unit Trust of India (UTI). With the
Government of India opening up the insurance sector to foreign investors in 2001and the
subsequent issue of major guidelines for ULIPs by the Insurance Regulatory and Development
Authority (IRDA) in 2005, several insurance companies forayed into the ULIP business
leading to an over abundance of ULIP schemes being launched to serve the investment needs
of those looking to invest in an investment cum insurance product.

Working Principle

A Unit Link Insurance Plan is basically a combination of insurance as well as investment. A

part of the premium paid is utilized to provide insurance cover to the policy holder while the
remaining portion is invested in various equity and debt schemes. The money collected by the
insurance provider is utilized to form a pool of fund that is used to invest in various markets
instruments (debt and equity) in varying proportions just the way it is done for mutual funds.
Policy holders have the option of selecting the type of funds (debt or equity) or a mix of both
based on their investment need and appetite. Just the way it is for mutual funds, ULIP policy
holders are also allotted units and each unit has a net asset value (NAV) that is declared on a
daily basis. The NAV is the value based on which the net rate of returns on ULIPs are
determined. The NAV varies from one ULIP to another based on market conditions and the
fund’s performance.

Features

ULIP policy holders can make use of features such as top-up facilities, switching between
various funds during the tenure of the policy, reduce or increase the level of protection, options
to surrender, additional riders to enhance coverage and returns as well as tax benefits.
Types

There are a variety of ULIP plans to choose from based on the investment objectives of the
investor, his risk appetite as well as the investment horizon. Some ULIPs play it safe by
allocating a larger portion of the invested capital in debt instruments while others purely invest
in equity. Again, all this is totally based on the type of ULIP chosen for investment and the
investor preference and risk appetite.

Charges

Unlike traditional insurance policies, ULIP schemes have a list of applicable charges that are
deducted from the payable premium. The notable ones include policy administration charges,
premium allocation charges, fund switching charges, mortality charges, and a policy surrender
or withdrawal charge. Some Insurer also charge "Guarantee Charge" as a percentage of Fund
Value for built in minimum guarantee under the policy.

ULIP Controversies

It is estimated that Investors lost Rs.1.5 trillion due to insurance mis-selling. Most news papers
in India covered various stories and critically reviewed these insurance institutions which mis-
sold these ulips to the small investors. Mint newspaper famously quoted it as "The Ulip rip-off
was an institutional defrauding of the small investors" and covered it in an article Ulip Rips off
Consumers.] Capitalmind, an excellent investor caring news outfit covered it as early as 2007
to educate consumers on how not to get defrauded by these ulip schemes. A Public interest
litigation was filed as well While hundreds of thousands of small investors lost their hard
earned money, some even committing suicides, the agents enjoyed their commissions and the
executives of these insurance companies collected Crores in bonuses by mis-selling these ulips.

Risks

Since ULIP (United Linked Plan) returns are directly linked to market performance and the
investment risk in investment portfolio is borne entirely by the policy holder, one needs to
thoroughly understand the risks involved and one’s own risk absorption capacity before
deciding to invest in ULIPs.
UNIT LINKED

Market linked insurance plans invest the premium in to the equity, debt and cash
markets by the way of allocating units, which like any other mutual fund have a
NAV and the customer is free to switch between one fund class to another
depending on the risk factor he wishes to be in. ULIPs offer a better return than the
traditional endowment plans and offer a great deal of flexibility along with great
returns making them the finest product offering. We at Bajaj Allianz Life Insurance
have developed a number of ULIP products which range from single premium to a
regular premium option along with investment funds ranging from index funds to
mid-cap funds and debt market linked funds.

Unit Linked Insurance Plan (ULIP) provides for life insurance where the policy value at
any time varies according to the value of the underlying assets at the time. ULIP is life
insurance solution that provides for the benefits of protection and flexibility in
investment. The investment is denoted as units and is represented by the value that it
has attained called as Net Asset Value (NAV).

ULIP came into play in the 1960s and is popular in many countries in the world. The reason
that is attributed to the wide spread popularity of ULIP is because of the transparency and
the flexibility which it offers.

As times progressed the plans were also successfully mapped along with life insurance need
to retirement planning. In today's times, ULIP provides solutions for insurance planning,
financial needs, financial planning for children’s marriage planning also can be done with
this.

Unit-linked life insurance products are those where the benefits are expressed in terms of
number of units and unit price. They can be viewed as a combination of insurance and
mutual funds. The number of units, which the customer would get would depend on the unit
price when he pays his premium. The daily unit price is based on the market value of the
underlying assets (equities, bonds, government securities etc.) and computed from the net
asset value. At the time of launch in 2001, BSLI as a conscious strategy launched all its
products on the unit-linked platform.
How do unit-linked products work?

The unit-linked plans work as under:

 The premium paid by the client, less any charges to be deducted, is used to buy units in
the fund selected by the client at that day's unit price. So more units are added to the client's
account each time he pays a premium. If the unit price on that day is relatively high the
client gets less number of units and if the unit price is relatively low then he gets more
number of units.
 In order to pay the regular monthly costs an equivalent numbers of units are cancelled
and are computed as cost to be deducted divided by unit price on that day.
 The value of the fund depends on the unit price, which in turn is determined from the
market value of the underlying assets as seen earlier. Thus, Fund Value = Unit Price x
Number of Units

When is the best time to buy unit-linked plans?

The ideal time to buy a unit-linked plan is when one can expect long-term growth ahead.
This is especially so if one also believes that current market values (stock valuations) are
relatively low. BSLI has given superior returns on all its investment funds.

Unit-linked plans enjoy several advantages. They are:

 Simple, clear and easy to understand

 Transparent and visible for customers to take decisions
 Flexible and adaptable
 Puts the policyholder in control
 Policyholder gets the entire upside on the performance of his fund
Besides all the advantages they offer to the customers, unit-linked plans also lead to an
efficient utilisation of capital
 Various Ulip plans
Unit Linked Insurance Plans - At a glance

ULIPs have gained high acceptance due to attractive features they offer. Unit Linked Insurance
scheme include:
1. Flexibility
1. Flexibility to choose Sum Assured.
2. Flexibility to choose premium amount.
3. Option to change level of Premium /Sum Assured even after the plan has
started.
4. Flexibility to change asset allocation by switching between funds.
2. Transparency
1. Charges in the plan & net amount invested are known to the customer.
2. Convenience of tracking one’s investment performance on a daily basis.
3. Liquidity
1. Option to withdraw money after few years (comfort required in case of
exigency).
2. Low minimum tenure.
3. Partial / Systematic withdrawal allowed
4. Fund Options
1. A choice of funds (ranging from equity, debt, cash or a combination).
2. Option to choose your fund mix based on desired asset allocation.

Unit-linked insurance plans (ULIPs) are long-term investment vehicles that provide you
financial protection while allowing wealth creation at market-linked returns. A part of your
premium is directed towards providing you with insurance and meeting administration
expenses while the rest of it is directed towards an investment fund.

Each ULIP offers several investment funds, each having a different risk and return profile. This
is because each fund comes with a different specified limit on the amount of debt and equity
that it can take an exposure to. You further have the freedom to switch from one fund to
another during the policy term. Due to these features, you can fulfil various financial goals
through a ULIP.

Life Stage You are single and You are married You are You are settled at Your children wish to Children are
have just started with no child married as your job and pursue higher independent and
 education / set up a
well as a have school going you are nearing
on the career path business / plan for
parent children retirement
their marriage
Protection Protection Protection Protection Protection Protection
- low - medium - high - high - medium - low
Your Need Wealth creation Asset creation Wealth creation
Wealth creation - high (need to - high (need Need lump sum Safe accumulation
and accumulation
- high save for liquidity for money to fulfil needs or retirement
- high
children) child’s need)
- Increase
death benefit
- Opt for higher
- Opt for
- Choose a low death benefit
Meeting the balanced fund Undertake - Lower the death
death benefit - Choose growth Undertake partial
Needs for asset partial benefit
- Allocate more to or balanced withdrawal to fulfill
Through creation withdrawal to - Opt for debt
equity oriented investment funds arising needs
ULIP - Choose meet liquidity oriented funds
investment funds for wealth
riders for
creation
enhanced
protection

To elaborate, ULIPs allow you to:

1. Protect your child's future

ith inflation inching up, a financial goal coming up for fulfillment tomorrow will
cost you much more than today. You thus need to invest in such a manner that the
returns not only counter inflation but also cover rising costs. With the equity
exposure available, unit linked child plans give you the opportunity to earn
market-linked returns and at the same protect your child's future.

2. Secure funds for critical milestones

You may require funds at various milestones of your child’s life such as his/her
higher education, marriage or business venture. The facility of ‘partial
withdrawals’ on offer gives you access to your money at critical stages so that you
have the right amount of money at the right time to address multiple needs.

3. Financially secure your retirement

Creating a corpus for your retirement is one of the most important goals of
financial planning. As equities perform well over the long term, ULIPs are an
ideal choice that can add value to your retirement portfolio. When you are young
and far away from retirement, you can choose an equity oriented fund which
invests largely in equities. As you grow old and near your retirement age, you can
gradually shift your investments in to more conservative debt funds. At
retirement, you have the option of choosing the annuity, either immediate or
deferred, as per your requirements.

SWOT ANALYSIS OF INSURANCE INDUSTRY

STRENGTH

1. Best returns with the added advantage of 100% life insurance coverage.

2. Good option for new investors into the market as all the money is invested by best fund

managers so with less knowledge also they can earn good Returns.

3. Best commission charges paid to the agents which vary from 12% to 35% which is much

higher as compared to mutual funds i.e. , only 2-2.5%.

WEAKNESS

1. HDFC SLIC could not able to match LIC in remote areas services.

2. Misleading facts given by life advisors about the returns of ULIPs.

3. Hidden charges taken by the companies.

4. Less Promotional Campaigns.

OPPORTUNITY

1. 80 percent of Indian population is still under insured. So there is a big opportunity for

insurance companies.

2. As the stock market can be under the mark any time so it can bring loss to the investors but

as in ULIPs there is proper mixture of debt securities and equity so the loss is incurred

during dark trading days also.

3. Unit-linked products are exempted from tax and they provide life insurance.
4. Increasing consumer awareness about Insurance and its use.

THREAT

1. Cannibalism within the industry by providing misleading figures to the investors.

2. Govt.’s instability has a long term repercussions affecting company’s policies and its

growth.
 COMPANY’S PROFILE

INTRODUCTION

Helping Indians experience the joy of home ownership.

Incorporated in 1977 with a share capital of Rs. 10 crores, HDFC has since emerged as the

largest residential mortgage finance institution in the country. The corporation has had a series

of share issues raising its capital to Rs. 119 crores. HDFC operates through 75 locations

throughout the country with its Corporate Headquarters in Mumbai, India.

OBJECTIVES AND BACKGROUND

Background

HDFC was incorporated in 1977 with the primary objective of meeting a social need – that of

promoting home ownership by providing long-term finance to households for their housing

needs. HDFC was promoted with an initial share capital of Rs. 100 million.

Business Objectives

The primary objective of HDFC is to enhance residential housing stock in the country through

the provision of housing finance in a systematic and professional manner, and to promote

home ownership.

Another objective is to increase the flow of resources to the housing sector by integrating the

housing finance sector with the overall domestic financial markets..

ORGANIZATION AND MANAGEMENT

HDFC is a professionally

managed organization with

a board of directors

consisting of eminent

persons who represent

various fields including

finance, taxation,

construction and urban

policy & development. The

board primarily focuses on

strategy formulation, policy

and control, designed to

deliver increasing value to

shareholders.
HDFC hasand marketing.

SUBSIDIARY & ASSOCIATE COMPANIES

 HDFC Mutual Fund

 HDFC Standard Life ++

 Intelenet Global Services Ltd.

 HDFC Chubb General Insurance Company Ltd.

 HDFC Reality

 Other Companies Co-Promoted by HDFC

 HDFC Trustee Company Ltd.

 HDFC Developers Ltd.

 HDFC Venture Capital Ltd.

 HDFC Ventures Trustee Company Ltd.

 HDFC Investments Ltd.

 HDFC Holdings Ltd.

 Home Loan Services India Pvt. Ltd.

 Credit Information Bureau (India) Ltd

 HDFC STANDARD LIFE INSURANCE

INTRODUCTION :

HDFC Standard Life Insurance Company Limited was one of the first companies to be granted

license by the IRDA to operate in life insurance sector. Each of the JV player is highly rated

and been conferred with many awards. HDFC is rated 'AAA' by both CRISIL and ICRA.

Similarly, Standard Life is rated 'AAA' both by Moody's and Standard and Poors. These reflect

the efficiency with which HDFC and Standard Life manage their asset base of Rs. 15,000 Cr

and Rs. 600,000 Cr respectively.

HDFC Standard Life Insurance Company Ltd was incorporated on 14th August 2000. HDFC is

the majority stakeholder in the insurance JV with 81.4 % stake and Standard Life has a stake of

18.6%. Mr. Deepak Satwalekar is the MD and CEO of the venture.

THE PARTNERSHIP :

HDFC and Standard Life first came together for a possible joint venture, to enter the Life

Insurance market, in January 1995. It was clear from the outset that both companies shared

similar values and beliefs and a strong relationship quickly formed. In October 1995 the

companies signed a 3 year joint venture agreement.

Around this time Standard Life purchased a 5% stake in HDFC, further strengthening the

relationship.

In October 1998, the joint venture agreement was renewed and additional resource made

available. Around this time Standard Life purchased 2% of Infrastructure Development

Finance Company Ltd. (IDFC). Standard Life also started to use the services of the HDFC

Treasury department to advise them upon their investments in India.

Towards the end of 1999, the opening of the market looked very promising and both

companies agreed the time was right to move the operation to the next level. Therefore, in

January 2000 an expert team from the UK joined a hand picked team from HDFC to form the

core project team, based in Mumbai.

Around this time Standard Life purchased a further 5% stake in HDFC and a 5% stake in

HDFC Bank.

COMPANY’S MISSION:

To be the top life insurance company in the market.

This not only means being the largest or the most productive company in the market, but a

combination of several things like-

 Customer service of the highest order

 Value for money for customers

 Professionalism in carrying out business

 Innovative products to cater to different needs of different customers

 Use of technology to improve service standards

 Increasing market share

COMPANY’S VALUES:

 SECURITY: Providing long term financial security to our policy holders will be our

constant endeavor. This is done by offering life insurance and pension products.
  TRUST: Company appreciates the trust placed by our policy holders in us. Hence,

company will aim to manage their investments very carefully and live up to this trust.

 INNOVATION: Recognizing the different needs of our customers, company will be

offering a range of innovative products to meet these needs.

Company’s mission is to be the best new life insurance company in India and these are the

values that will guide us in this.

KEY MANAGEMENT PERSONNEL

Chairman

Mr. Deepak S. Parekh

Board of Directors

Mr. K. M. Mistry

Ms. Renu S. Karnad

Mr. A. M. Crombie

Ms. Marcia D. Campbell

Mr. Norman Keith Skeoch

Mr. G. R. Divan

Mr. G. N. Bajpai

Mr. Ranjan Pant

Mr. Ravi Narain

Managing Director & CEO

Mr. D. M. Satwalekar

AUDIT COMMITTEE

Haribhakti & Company

Chartered Accountants

B.K. Khare & Co.

Chartered Accountants

Bankers

HDFC Bank Ltd.

Union Bank of India

Indian Bank

The Saraswat Co-operative Bank Ltd.

Federal Bank
 May, 2008
Received PCQuest Best IT Implementation Award 2008

HDFC Standard Life received the PCQuest Best IT Implementation Award 2008 for
 Consultant Corner, the applications for its financial consultants, providing centralized
control over a vast geographical spread for key business units such as inventory,
training, licensing, etc. Read more about the ‘Consultant Corner’ tool in the ‘HDFC SL
in News’ Section.

HDFC Standard Life has won the PCQuest Best IT Implementation Award for two
years consequently. Last year, the company received the award for Wonders, its path-
breaking implementation of an enterprise-wide workflow system

 
March, 2008
Silver Abby at Goafest 2008

HDFC Standard Life's radio spot for Pension Plans won a Silver Abby in the radio
 writing craft category at the Goafest 2008 organised by the Advertising Agencies
Association of India (AAAI). The radio commercial ‘Pata nahin chala’ touched several
changes in life in the blink of an eye through an old man’s perspective. The objective
was drive awareness and ask people to invest in a pension plan to live life to the fullest
even after retirement, without compromising on one’s self-respect.
Laadli Media Award 2007
 
HDFC Standard Life received Laadli Media Award 2007 for
its 'Big car' TV commercial. It showed how a daughter
wants to be more responsible towards her family and asks
her dad to upgrade to a bigger car by offering him the extra
money required to buy the car.

HDFC Standard Life received this award for two years

consecutively. In 2006, it won for the 'Papa' TV commercial,
which challenged the stereotype parents saving only for their son's education or
daughter's wedding. The company took a bold step by showing parents saving for their
daughter's education abroad, demonstrating progressive thinking.
Laadli Media Awards, instituted in 2007, by Population First, an NGO working on
women's rights and social development, is given to professionals in print and electronic
media and ad makers for gender sensitive news reports, articles, print, TV ads, and films.

 
March, 2008
Unit Linked Savings Plan Tops Mint Best TV Ads Survey
 The Unit Linked Savings Plan advertisement of HDFC Standard Life, one of the leading
private insurance companies in India, has topped Mint’s Top Television Advertisement
survey conducted, for February 2008. HDFC Standard Life’s Unit Linked Savings Plan
advertisement was ranked 4th in terms of a combined score of ad awareness and brand
recall and 3rd in terms of ad diagnostic scores (likeability, enjoyment, believability, and
claim). The respondents were between 18 and 40 years. Mint’s exclusive report, ‘New
voices in a makeover’ outlines the survey in detail.

February, 2008
Deepak M Satwalekar Awarded QIMPRO Gold Standard Award 2007
  Mr Deepak M Satwalekar, Managing Director and CEO, HDFC Standard Life,
received the QIMPRO Gold Standard Award 2007 in the business category at the 18th
annual Qimpro Awards function. The award celebrates excellence in individual
performance and highlights the quality achievements of extraordinary individuals in
an era of global competition and expectations.

January, 2008
Sar Utha Ke Jiyo Among India’s 60 Glorious Advertising Moments
  HDFC Standard Life’s advertising slogan honoured as one of ‘60 Glorious Advertising
& Marketing Moments' over the last 60 years in India,’ by 4Ps Business and Marketing
magazine. The magazine said that HDFC Standard Life is one of the first private
insurers to break the ice using the idea of self respect (Sar Utha Ke Jiyo) instead of
'death' to convey its brand proposition. This was then, followed by others including
ICCI Prudential, thus giving HDFC Standard Life the credit of bringing up one such
glorious advertising and marketing moment in the last 60 years.
 PROJECT OBJECTIVES

 To know about the insurance marketing strategy of ulip product.

 To study various ulip product & plans.

 The analysis the cocept of insurance & marketing of ulip.

 To suggest the ways to improve & cover the local area of ulip plans.
 RESEARCH MEHODOLOGY

The study of awareness about Financial Planning among the people and particularly the

insurance sector covers data collection through observation, questionnaire and interview of

consumers.

Type of research

Exploratory :

Type of research carried out was EXPLORATORY in nature; the objective of such research is

to determine the approximate area where the drawback of the company lies and also to identify

the course of action to solve it. For this purpose the information proved useful for giving right

suggestion to the company.

Data Collection:

 Primary data

 Secondary data

Data used for the research work was primary in nature.

Sample unit: -
The research process was done by interacting with number of customers during the activities

performed, which included, markets, cold calling, canopies, etc. Sample Design consists of

Random Sampling.

Sample size: - 100 people

Method of collection: -

Field procedure for gathering primary data included observation and interview schedule in

which the questionnaires were filed by the interviewer.

Personal interviews through self administered survey was done to collect the data, market

research was undertaken, that was accomplished by performing various activities designed.

Research Instrument:

 Questionnaire

The questionnaire was formulated by keep in mind the following Points: -

 Giving the respondents clear comprehension of the question.

 Inducing the respondents to co-operate.

 Giving instructions as to what is wanted.

 Identifying the needs to be known.

Limitations:

The following were the limitations that were there during the course of the study:4

1. Limited time period.

 2. Less number of respondents.

3. Biasness of the respondents.

KNOWLEDGE MANAGEMENT

When Should One Go For Insurance?

Your insurance need will change as your life does, from starting to work to enjoying your

golden years and all the stages in between. Each one of these stages may pose a different

insurance need/cover for you. In this section, we have drawn up the basic life stages and help

you analyze various insurance needs accordingly.

Stage 1: Young and Single

This is an important stage where one lays down the foundation of a successful life ahead. Take

advantage of the time and power of compounding to ensure that you build up your dreams, so

start saving early.

Your needs:

o Save for a home and wedding

o Tax Planning

o Save for Golden years

Stage 2 - Just Married

Marriage brings about a significant change. New dreams and new opportunities also bring in

additional responsibilities. While both of you look forward to a happy and secure life, it is

equally important to ensure that eventualities don’t come in the way of shaping your dreams.

Your needs:

o Planning for home / securing your home loan

Liability

o Save for vacation

 o Save for your first child

Stage 3 - Proud Parents

Once you have children, your need for life insurance is even more. You need to protect your

family from an untoward incident. Ensure your protection umbrella takes into account the

future cost of securing your child’s dream. You will want life to go on for your loved ones, and

having enough life insurance is a way to help ensure that.

Your needs:

o Provide for children’s education

o Safeguarding family against loan liabilities

o Savings for post-retirement

Stage 4 - Planning for Retirement

While you are busy climbing the ladder of success today, it is important for you to take time

and plan for your life after retirement. Having an early start for retirement planning can make a

significant difference to your savings. Think about your golden years even before you have

reached them. The key is to think ahead and plan well using your time and money.

Your needs:
o Provide for regular income post retirement

o Immediate Tax benefits

o Lead a secure, independent and comfortable

Life style after retirement

 GROUP PLANS

HDFC Standard Life has the most comprehensive list of products for progressive employers

who wish to provide the best and most innovative employee benefit solutions to their

employees. They offer different products for different needs of employers ranging from term

insurance plans for pure protection to voluntary plans such as superannuation and leave

encashment.

Plans: Group Term Insurance with Riders

Group Term Insurance with Profit-Share

Group Unit-Linked Plan

For Gratuity

For Defined Benefit Superannuation

For Defined Contribution Superannuation

Group Leave Encashment Plan

RURAL CUSTOMER - According to research findings, there is keenness among rural

customers to invest in savings cum protection plan with a term of five years, especially, if the

premium amount is low and affordable. Keeping this in view, HDFC STD> LIFE has plans

like:

Plans: Bima Bachat Yojana.

Super Bachat Yojana

DISTRIBUTION OFFICES

In addition to the corporate office at Mumbai, your Company had 169 offices in over 135

cities/towns in the country. It has a widespread network of Financial Consultants, Corporate

Agents and Brokers servicing customers in these cities and towns.

FINANCIAL CONSULTANTS

The number of licensed Financial Consultants appointed by your Company increased from

over 23,000 in the previous year to over 33,000 in the current year. During the year, the

Company continued its

 FINANCIAL HIGHLIGHTS - HDFC Standard Life

“HDFC STANDARD LIFE PACING AHEAD”

The Financial Express 15th May 2007

“HDFC Standard Life has recorded a strong year-on-year growth of 112% for the period

April-March 2006-07, in comparison to the same period 2005-06, with a new business

first year premium of Rs. 1,029 crore.

In terms of effective premium income (EPI), which gives a 10% value to a Single

Premium policy and is an internationally-accepted indicator of an insurance company's

performance, the EPI grew by 103% to Rs. 887 crore from Rs. 436 crore.

HDFC Standard Life's growth in new business is a manifestation of the number of lives

insured as well as an increase in the average premium. For the individual business,

volume measured by the number of lives insured witnessed a 32% growth.

The average premium also grew by 62% to Rs 27,500 in 2006-07 from Rs 17,000 in 2005-

06.

During the year the company issued over 3,97,000 policies and has covered more than

5,80,000 lives”
Table Showcasing Financial Results:

April-March April-March

Parameters 2005-06 2006-07 Growth

(Rs. Cr) (Rs. Cr) (%)

Total received
668.40 1532.21 129.23
premium

    i.  New Business 486.15 1028.94 111.65

    ii. Renewal 182.25 503.27 176.14

Effective Premium

Income (Total) 436.08 887.30 103.47

Group Business

Premium (EPI) 49.40 135.15 173.58

FUTURE PLANS

HDFC has always been market-oriented and dynamic with respect to resource mobilization as

well as its lending program. This renders it more than capable to meet the new challenges that

have emerged. Over the years, HDFC has developed a vast client base of borrowers,

depositors, shareholders and agents, and it hopes to capitalize on this loyal and satisfied client

base for future growth. Internal systems have been developed to be robust and agile, to take

into account changes in the volatile external environment.

HDFC has developed a network of institutions through partnerships with some of the best

institutions in the world, for providing specialized financial services. Each institution is being

fine-tuned for a specific market, while offering the entire HDFC customer base the highest

standards of quality in product design, facilities and service.

 FINANCIAL PLANNING

A comprehensive financial advisory service involving financial strategies, tax, corporate/trust

structures, estate planning, legal issues, family law, asset allocation, asset protection and

investment advice.

Financial Planning takes into account:

 Desired asset allocation, risk profile and return expectations.

 Building cash flows correlating all expenses and income. Inflation and outflows due to

loans are considering in building the financial plan.

 Future goals like retirement, housing and children's education / marriage or other needs.

Why do you need Financial Planning?

You may have many dreams, needs and desires. For example, you could be dreaming of:

 Owning a new car,

 Buying a dream house,

 Providing your children with the best education,

 Planning a grand wedding for your children

 Having a great time after your retirement

But in today's world of skyrocketing costs and increasing inflation, how many of these dreams

can you hope to turn into reality? By planning well, you can utilize your limited resources to

the fullest.
EXPERIENCE THE POWER 360º FINANCIAL PLANNING

The only thing permanent in life is change. Times change. People change. So does life. You

expect life to be much better tomorrow than it is today. Tomorrow, you hope to fulfill all your

dreams and aspirations. But what happens if things take an untoward turn? Or, if there is an

eventuality? Perhaps it's time for you to change the way you plan your investments.

                               

                               

                                                           

How will 360° Financial Planning help?

Instead of investing in an ad-hoc manner, 360°

Financial Planning helps you take a holistic, all-round view. Briefly, 360° Financial Planning

comprises:

 Investment Planning

 Cash Flow Planning

 Tax Planning

 Insurance Planning

 Children’ Future Planning

 Retirement Planning
INVESTMENT PLANNING: To make your wealth grow- Everyone needs to save for

a rainy day. Once you have saved enough to take care of emergencies, you should start

thinking about investing and to make your money grow.

Investment Planning Service includes:

 Risk Profiling

 Asset Allocation and Portfolio Construction

 Creation and Accumulation of Wealth through Systematic Investment Plans (SIP)

 Regular review of progress and Portfolio Rebalancing

CASH FLOW PLANNING: To provide for assets and meet the periodic cash

requirements

In simple terms, cash flow refers to the inflow and outflow of money. It is a record of your

income and expenses.

Cash flow planning refers to the process of identifying the major expenditures in future (both

short-term and long-term) and making planned investments so that the required amount is

accumulated within the required time frame.

TAX PLANNING: To save on taxes and increase your income

Proper tax planning is a basic duty of every person which should be carried out

religiously.

According to the Income Tax Act, 1961, one will be eligible for Tax Benefits under Section

80C and Section 10(10D) of the act.

One has to compare the advantages of several tax saving schemes and depending upon your

age, social liabilities, tax slabs and personal preferences, decide upon a right mix of

investments, which shall reduce your tax liability to zero or the minimum possible.

INSURANCE PLANNING:

To protect yourself, your family and your Assets.

"Insurance is not for the person who passes away, it for those who survive," goes a popular

saying that explains the importance of Insurance Planning.

It is extremely important that every person, especially the breadwinner, covers the risks to his

life, so that his family's quality of life does not undergo any drastic change in case of an

unfortunate eventuality. Insurance Planning is concerned with ensuring adequate coverage

against insurable risks.

CHILDREN'S FUTURE PLANNING:

To give your children a financially secure future Like every parent, you too must be overjoyed

to watch your child grow. All parents want to give the best possible upbringing to their

children. This includes good education and security, in case of any eventuality. Soon, your

little bundle of joy will grow up, and it will be time to provide for his or her higher education

and wedding.

The purpose of Children's Future Planning is to create a corpus for foreseeable expenditures

such as those on higher education and wedding, and to provide for an adequate security cover

during their growing years.

RETIREMENT PLANNING:

Because retirement is a time to relax, not to get worried Some like it. Some don’t. But

retirement is a reality for every working person. Most young people today think of retirement

as a distant reality.

However, it is important to plan for your post-retirement life if you wish to retain your

financial independence and maintain a comfortable standard of living even when you are no

longer earning. This is extremely important, because, unlike developed nations, India does not

have a social security net.

 CONSUMPTION PATTERN

1.60 Food & Grocery

4.60
2.100.80% Home Textiles
% %
7.60% Personal Care
%
Saving & Investment
2.30
% Clothing
40.10%
Consumer Durable
10.80% Vacation
Eating out
3.90 Footwear
%
Movies & Theater
6.60
% 4.10 Entertainment
8.80 % Accessories
6.90 %
% Books & Music

*Source-Business world magazine 2nd week April 2006

The consumption pattern is determined by the income so more would be the income more

would be the consumption. The consumption though can differ in terms of areas where the

money is actually spent. The above representation tells us the consumption pattern of the

consumer in India i.e. where do they actually invest their money and in what proportion do

they spend in various areas. The chart shows that people are spending 6.9% of their savings

into savings and investments.

INVESTMENT PREFERENCE

INVESTMENT PREFERENCE
Banks & Post
office
9% Share Market
21%
21% Insurance

Bonds
18%
11%
Mutual Funds
20%
Real Estate

 21% respondents prefer banks and post office schemes as an investment tool

preference.

 Respondents of age group below 30 years prefer Mutual Funds, as they

provide higher returns than banking investment tools.

 Insurance ranks 2nd as an investment tool choice, which itself includes

various protection, saving and pension plans.

 Govt. Bonds & securities are mostly preferred by people of higher age group

rather than young generation.

 Property as an investment option is most lucrative choice. However it is

important to mention that majority of respondents are in age group of above

30 years and people with high income bracket prefers to invest in Real Estate.
 55% of respondents have insurance cover provided by LIC only

 15% of respondents have insurance cover provided by Private Cos. only

 Whereas 30% have got insurance from both LIC and Private Companies.

 Total number of LIC policies sums up to 85% and total number of Pvt.

Companies policies sold sums up to 45%.

 Data provides that though LIC is still got a maximum market share but Private

Companies are making a fast move in the market.

 TYPE OF PLAN BOUGHT

TYPE OF PLAN

17, 20% MONEY BACK

26, 29%
ENDOWMENT

PENSION PLAN
24, 28%
ULIPs
20, 23%

 Money back Policies have been most popular and also the endowment plans.

 As people today are more aware about financial planning, so people of the age

30 years have planned for their Retirement now.

 ULIPs are fast gaining popularity as they provide investment

benefit with Insurance.

 PURPOSE OF BUYING INSURANCE

PURPOSE OF BUYING INSURANCE

Retirement
Planning
14%

Tax Benefit 23%

Investment 11%

Risk Cover 52%

0 10 20 30 40 50 60

 Risk cover remains the most important purpose for buying insurance followed

by option as Tax saving tools.

 Retirement Planning in a early period is also gaining the market share.

 ULIPs are responsible for increasing popularity of insurance as an investment

tools.
 According to the data, known/current Advisors remains the 1st choice for

buying Insurance.

 In retail also known Advisors are preferred over referrals.

 Bancassurance is emerging as a popular option for buying life Insurance.

 Group insurance is a channel which customers expect but it is not so popular

because only few employers have taken the initiative.

 Buying insurance from a unknown person or getting a phone call is still not

preferred by most of the people.

 CONCLUSION

The various conclusions drawn from the project are:

There has been a tremendous change in the insurance industry. And with it there has been

continuous growth in this sector both in Indian as well as world context.

The opening up of the insurance sector has changed the whole look of the industry. While the

LIC, in order to face the competition is coming up with new strategies. New private players are

leading the sector due to their strategic management and tailored made projects.

From the research, we also conclude that though the awareness and people opting for LIC

plans are more as compared to other private players’ but the latter are gaining momentum in

the market day by day.

The demand for insurance is likely to increase with rising per-capita income, rising literacy

rates, and growth of service sector. In-fact opening up of the insurance sector is an integral part

of the liberalization process being persued by many developing countries.

Life insurance as a form of protection is the single-most important financial product any

earning member of a family must have. Having said this, a well-diversified portfolio is one of

the first rules of financial planning, and as such one should consider different instruments as

the ability to save increases.

Possible investment options range from bank deposits and government small saving schemes to

mutual funds, stocks and property.

Certainly ULIPs successfully combine the first and most important need of protection, with

savings, and hence are an excellent addition to your portfolio.

All financial products have a certain amount of risk and charges, be it a mutual fund, property,

or even a bank deposit. It would be unrealistic to assume that the features and benefits of a

ULIP come at no cost, though the charges are considerably lower than that of a traditional

product.

In fact, the very reason the product is transparent is because the customer knows the charges

and risks.

There is no right or wrong in this. The success of marketing insurance depends on

understanding the social and cultural needs of the target population, and matching the market

segment with the suitable intermediary segment. All intermediaries can’t sell all lines of

business profitably in all markets. There should be clear demarcation in the marketing

strategies of the company from this perspective. Clients should also receive price differentials

for using different channels.

The intermediaries need to be empowered with the right learning, training and sales tools and

technology enablers. Coupled with the right product mix, this will help the insurers to survive

and flourish in this competitive market scenario. So lets conduct this business with utmost

economy with the spirit of trusteeship; thereby making insurance widely popular.
 RECOMMENDATION

 Positioning insurance as a means to fulfilling one’s duties during one’s lifetime.

 Fears relating to thefts, ailments, death could be addressed through ‘sensitive’

communication

 Fears relating to claims: Need to promote “trust”. Demonstrating claim testimonials,

positioning as “worry free”.

 Low returns: Reposition insurance as a risk cover, security instrument rather than a

financial investment.

 Lack of understanding: Training of Channels

 To provide quality advice on products best suited

 Lack of Knowledge: Ease of Process, simplifying the product and the procedure

 Need to promote the quality of awareness

 The benefits: Leverage on Risk Protection or Returns oriented or both

 The product: catering to life stages

 Need for Branding in Insurance: Branding is more relevant in the Insurance market

which not only faces the problem of securing and retaining customers in an increasingly

competitive marketplace but also experiences the need for heightened relevance of the

brand proposition in a world where brand has been termed the new religion.

 In rural India, the LIC is especially synonymous with insurance. But in the wake of

competition insurance companies have to do a considerable brand building exercise at

least in urban India.

Adequate time, investment and longer-term management of the brand are essential, not

only for success but also survival. All brands need to be built around well-differentiated
 and credible positioning that springs from the organization’s history. The brand must

not only be believed but lived by management and employees.

 Focus on different segments to survive and thrive in a competitive environment. Each

company has to choose its own unique positioning based on its unique strengths. Below-

mentioned positioning alternatives can be worth considering.

VARIETY-BASED POSITIONING

This type of positioning is based on varieties in products and services rather than customer

segments. It is a sensible strategy for those companies who have distinctive advantages or

strengths in offering certain products and services. In the insurance industry too, it is

possible to achieve a unique position by focusing on certain category of products.

NEEDS-BASED POSITIONING

This is the most commonly understood positioning and is based on the differing needs of

different groups of consumers. This can be done successfully if a company has unique

strengths to service a group of customer needs better than others.

The insurance needs of customers vary significantly for different groups of customers. The

insurance needs of young family with small children will be quite different from that of a

family in which the income-earner is close to retirement. However, in India most of the life

insurance companies have a wide variety of products tailored for different customer needs

and there is no company focusing on a particular customer need.

ACCESS-BASED POSITIONING

Positioning of customers can also be done by the way they are accessible. That is different

groups of customers may be accessible in different ways even though they may have

similar needs. Access is typically a function of customer geography or customer scale.

There is excellent opportunity in the insurance industry to employ access-based positioning

by targeting the rural insurance sector.

The rural market for life insurance is very different from the urban market in terms of

needs, income levels and distribution (seasonality, for example), penetration of media and

so on. Rural market can be a highly profitable position if one is able to carefully plan and

tailor an entire set of low-cost activities of advertising, distribution, and product design etc.

to successfully exploit the potential.

GLOSSARY

Accident Benefit

An add-on with a life policy. It compensates a policyholder in the event of death or injury by

accident

Annuity

An investment option that makes a series of regular payments to an individual in exchange for

a premium or a series of premium.

Asset allocation

How your investments are spread across various asset classes

Bonus

The amount paid as return in a ‘with-profit’ policy. The bonus, expressed as a percentage of

the sum assured, is generally declared every year. The amount is linked to the profits earned by

the insurer. Depending on the time of withdrawal, there are two kinds of bonuses –

reversionary and cash. A reversionary bonus can be encashed only on maturity of the policy; a

cash bonus can be withdrawn when declared

Capital gains

Profit earned from the sale of stocks, mutual fund units and real estate. Long-term capital gains

arise from assets owned for more than a year while short-term capital gains are made from

assets owned for less than a year.

 
Corpus

The amount of money available with a scheme for investing. If already invested, the corpus is

the current value of the scheme’s portfolio.

Cover

Another word for insurance; it also refers to the amount of insurance.

Critical illness rider

A rider that provides a policyholder financial protection in the event of a critical illness

Death benefit

The amount payable to the nominee on death of the policyholder. The amount paid is the sum

assured plus benefits applicable (if any) less outstanding loans.

Endowment plans

An insurance plan that provides a policyholder risk cover and some return on investment.

Usually suitable for the risk-averse

ELSS (equity-linked savings schemes)

Diversified equity funds that additionally offer a tax deduction under Section 80C on

investments up to Rs.1 lakh.

Financial planning

It covers the essential elements of a person’s financial affairs and is aimed at achieving a

person’s financial goals.

Group Insurance

An insurance policy taken out by employers to provide life cover to their employees. Usually

the cheapest form of insurance.

Insured

The policyholder: The person who buys an insurance policy

Insurer

The insurance company

Investments

Assets like fixed deposits, post office savings, bonds and stocks that are acquired for the

purpose of earning a return

Liquidity

The quality of assets that can be easily and quickly converted into cash without any, or

significant, loss in value.

Lock-in period

The period of time for which investments made in an investment option cannot be withdrawn.

Maturity date

The date on which a policy term or fixed-income investment like fixed deposit or bond comes

to an end.

 
Money-back plans

A variant of endowment plans in which survival benefits are disbursed through the policy term,

rather than in a lump sum at the end.

Net asset value (NAV)

The simplest measure of how a scheme is performing, it tells how much each unit of it is worth

at any point in time. A scheme’s NAV is its net assets (the market value of the financial

securities it owns minus whatever it owes) divided by the number of units it has issued.

Nominee

The person(s) nominated by the policyholder to receive the policy benefits in the event of his

death.

Pension Plan

Investment products offered by insurance companies and mutual funds that required the

investor to make defined contributions over regular periods, mostly every year. The

contributions are invested according to a pre-decided investment plan. At retirement, the

accumulation is paid out through regular pay-out options.

Policy

The legal document issued by an insurance company to a policyholder that states the terms and

conditions of an insurance contract.

Policy term

The period for which an insurance policy provides cover

 Post office schemes

Also known as Small Savings schemes, they are offered at post offices and carry the highest

returns among fixed income instruments. Government backing makes these instruments like

Public Provident Fund (PPF), National Savings Certificate (NSC), Kisan Vikas Patra (KVP)

and Post Office Monthly Income Scheme (POMIS) risk-free

Premium

The amount paid by the insured to the insurer to buy cover

Riders

Additional covers that can be added to a life policy, for a cost

Sum assured

The amount of cover taken under a life insurance policy, it is the minimum amount that will be

paid on death of the policyholder during the policy term.

Surrender value

The amount payable by the insurer to the owner of an investment-based plan in case he opts to

terminate the policy after three years (the mandatory lock-in period) but before its maturity

date. The surrender value will be the premium paid till date minus surrender charges and any

outstanding loans due.

Term plans

A plan that provides life cover for a specified period of time, but no return on the premium

paid.
 Vesting date

In pension plans, it is the date from which the policyholder starts receiving pension. In

children’s plans, it is the date from which a child becomes the owner of a policy taken out in

his name (generally, around his 18th birthday).

  

Waiver of premium rider

A rider that waives the premium payable on the base policy and other riders in certain

circumstances mostly related to death, disability or injury. An important feature especially for

investment products such as children’s policies.

  

Will

A document that designates the assets of a person-both financial and physical- to various

family members and other heirs.

Whole-life plans

Class of life insurance policies that provide cover through your lifetime.
 LIMITATION OF THE STUDY

First and foremost difficulty was that the published was not available for which I want

to study.

 Time limitation

 Research has been done only in Muzaffarnagar.

 Companies did not disclose their secrets data and strategies.

 Respondents error

 Limited resources
 BIBLIOGRAPHY

BOOKS

,By Philip kotaler

Marketing of Service By Dr. S.L Gupta and V.V. Ratna

Finanaial Management By I.M.Panday

Economics Times

Websites

www.rbi.org.in

www.irdaindia.org

www.banknetindia.com

www.hdfcinsurance.com

www.businessworldonline.com

www.google.com (search engine)

Other References:

Brochures of various plans