A

Summer Placement Report

on

HDFC Standard Life Insurance Company Limited

Submitted To Punjab Technical University in Partial Fulfillment of the Requirements

for the Degree Of

MASTERS IN BUSINESS ADMINISTRATION

(2009-2011)

SWAMI VIVEKANAND COLLEGE OF

MANAGEMENT
 CERTIFICATE

This is to certify that the project “INVESTMENT PORTFOLIO” is carried out by the

student of Swami Vivekanand College of Management, MBA 3rd semester under my
supervision and guidance. No part of this work has been submitted for any other
university. The data sources have been duly acknowledged.

It may be considered for evaluation in partial fulfillment of the degree of Master of

Business Administration.

Date:                                                            Ms. Monika saini

                                                                     (Project Guide)

2
 DECLARATION

I ATINDER JEET SINGH, hereby declare that this project report entitled
INVESTMENT PORTFOLIO(Conducted with HDFC Standard Life Insurance) held at
HDFC Standard Life Insurance Corporation (MOHALI BRANCH), is the result of
Original work Carried out by me during 42 Days (i.e. 6 to 7 weeks) in intensive study of
the field, for the award of the Degree of MASTERS OF BUSINESS
ADMINISTRATION.

This Report has not been copied from anywhere, up to the best of my belief and
knowledge. It has not been submitted anywhere else for Award of any other
Degree/diploma.

ATINDER JEET SINGH

MBA (III sem)

3
 ACKNOWLEDGEMNT

It is my proud privilege to express my sincere gratitude to all those who helped me

directly or indirectly in completion of this project report.

I am greatly indebted to Mrs.Geetangali (Branch Manager) and Mr. Vinay kumar rana
(traineer) for their support, guidance and valuable suggestions by which this work has
been completed effectively and efficiently. These all contributions are of immense value.

I owe thanks to Mrs. Shashi Jain (Principal) Ms. Monika Saini(Head of the Department,
project guide) for providing the required data to complete this project. Without which it is
not possible to complete the project.

Last but not least we are indebted to those entire people who indirectly contributed and
whom this work should not have been possible.

Endeavour has been made to make the project error free yet I apologies for the mistakes.

ATINDER JEET SINGH

4
 PREFACE

Our MBA course is of administrative and managerial activity of industrial, Business or

Service organization. The main objective of this project study is to help the student to
develop ability to practical technique to solve real life problem related industries in
Business or Service organization.

According to the rules, I have taken my summer training in HDFC Standard Life
Insurance. Our guardian, professors and managers give the knowledge and guidance to
us.

The summer training programmed for student of M.B.A Sem-II training is for two
months in the time of summer vacation theoretically knowledge and class room
discussion is not sufficient for the student but training given them practical and day to
day working of bank.

In this project report I had tried to analyze the needs of the customers and suggest them
the most suitable insurance solution. As well as I tries to analysis awareness about the
insurance policy and its related companies among the people.

5
 TABLE OF CONTENTS

CHAPTER.1.Introduction to Insurance 5

Research Design 10

Company Profile of HDFC SLIC 16

Company Profile of Tata AIG LIC 29

POP’s and POD’s 33

Competitive analysis 38

Marketing problems 43

Analysis and Interpretation 46

Future line of research 63

Conclusion 65

References 67

Appendix 68

6
INDIAN INSURANCE
INDUSTRY
“AN OVERVIEW”

7
 THE INSURANCE INDUSTRY IN INDIA

AN OVERVIEW

With the 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 and presently is of the order of Rs 1560.41 billion (for the financial
year 2006 – 2007). Together with banking services, it adds about 7% to the country’s
Gross Domestic Product (GDP). The gross premium collection is nearly 2% of GDP and
funds available with LIC for investments are 8% of the GDP.

Even so nearly 65% of the Indian population is without life insurance cover while health
insurance and non-life insurance continues to be below international standards. A large
part of our population is also subject to weak social security and pension systems with
hardly any old age income security. This in itself is an indicator that growth potential for
the insurance sector in India is immense.

A well-developed and evolved insurance sector is needed for economic development as

it provides long term funds for infrastructure development and strengthens the risk
taking ability of individuals. It is estimated that over the next ten years India would
require investments of the order of one trillion US dollars. The Insurance sector, to some
extent, can enable investments in infrastructure development to sustain the economic
growth of the country. (Source: www.indiacore.com)

8
 HISTORICAL PERSPECTIVE

The history of life insurance in India dates back to 1818 when it was conceived as a
means to provide for English Widows. Interestingly in those days a higher premium was
charged for Indian lives than the non - Indian lives, as Indian lives were considered
more risky to cover. The Bombay Mutual Life Insurance Society started its business in
1870. It was the first company to charge the same premium for both Indian and non-
Indian lives.

The Oriental Assurance Company was established in 1880. The General insurance
business in India, on the other hand, can trace its roots to Triton Insurance Company
Limited, the first general insurance company established in the year 1850 in Calcutta by
the British. Till the end of the nineteenth century insurance business was almost entirely
in the hands of overseas companies.

Insurance regulation formally began in India with the passing of the Life Insurance
Companies Act of 1912 and the Provident Fund Act of 1912. Several frauds during the
1920's and 1930's sullied insurance business in India. By 1938 there were 176 insurance
companies.

The first comprehensive legislation was introduced with the Insurance Act of 1938 that
provided strict State Control over the insurance business. The insurance business grew
at a faster pace after independence. Indian companies strengthened their hold on this
business but despite the growth that was witnessed, insurance remained an urban
phenomenon.

The Government of India in 1956, brought together over 240 private life insurers and
provident societies under one nationalized monopoly corporation and Life Insurance
Corporation (LIC) was born. Nationalization was justified on the grounds that it would
create the much needed funds for rapid industrialization. This was in conformity with the
Government's chosen path of State led planning and development.

The non-life insurance business continued to thrive with the private sector till 1972.
Their operations were restricted to organized trade and industry in large cities. The

9
general insurance industry was nationalized in 1972. With this, nearly 107 insurers were
amalgamated and grouped into four companies- National Insurance Company, New
India Assurance Company, Oriental Insurance Company and United India Insurance
Company. These were subsidiaries of the General Insurance Company (GIC).

KEY MILESTONES

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

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

1938: Earlier legislation consolidated and amended by the Insurance Act with the
objective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers along with provident societies were taken over
by the central government and nationalized. LIC was formed by an Act of Parliament-
LIC Act 1956- with a capital contribution of Rs. 5 crore from the Government of India.

10
 INDUSTRY REFORMS

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. Since being set up as an independent statutory
body the IRDA has put in a framework of globally compatible regulations.

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 online service for issue and renewal of licenses to agents. The approval of
institutions for imparting training to agents has also ensured that the insurance
companies would have a trained workforce of insurance agents in place to sell their
products.

PRESENT SCENARIO - LIFE INSURANCE INDUSTRY IN INDIA

The life insurance industry in India grew by an impressive 47.38%, with premium
income at Rs. 1560.41 billion during the fiscal year 2006-2007. Though the total volume
of LIC's business increased in the last fiscal year (2006-2007) compared to the previous
one, its market share came down from 85.75% to 81.91%.

The 17 private insurers increased their market share from about 15% to about 19% in a
year's time. The figures for the first two months of the fiscal year 2007-08 also speak of
the growing share of the private insurers. The share of LIC for this period has further
come down to 75 percent, while the private players have grabbed over 24 percent.

With the opening up of the insurance industry in India many foreign players have
entered the market. The restriction on these companies is that they are not allowed to
have more than a 26% stake in a company’s ownership.

11
Since the opening up of the insurance sector in 1999, foreign investments of Rs. 8.7
billion have poured into the Indian market and 19 private life insurance companies have
been granted licenses.

Innovative products, smart marketing, and aggressive distribution have enabled

fledgling private insurance companies to sign up Indian customers faster than anyone
expected. Indians, who had always seen life insurance as a tax saving device, are now
suddenly turning to the private sector and snapping up the new innovative products on
offer. Some of these products include investment plans with insurance and good returns
(unit linked plans), multi – purpose insurance plans, pension plans, child plans and
money back plans. (www.wikipedia.com)

12
 COMPANY PROFILE
OF
HDFC STANDARD LIFE
INSURANCE COMPANY
LTD.

13
 HDFC STANDARD LIFE INSURANCE COMPANY
LIMITED

INTRODUCTION
HDFC 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. The
gross premium income for the year ending March 31, 2007 stood at Rs. 2,856 Crores
and new business premium income at Rs. 1,624 Crores. The company has covered over
8,77,000 lives year ending March 31, 2007.

HDFC operates through almost 450 locations throughout the country with its corporate
head quarters in Mumbai, India. HDFC also has an International Office in Dubai, UAE
with service associates in Kuwait, Oman and Qatar. HDFC is the largest housing
company in India for the last 27 years.

SNAPSHOT-I
 Incorporated in 1977 as the first specialized Mortgage Company in India.
 Almost 90% of initial shareholding in the hands of domestic institutes and retail
investors. Current 77% of shares held by foreign institutional investors.
 Besides the core business of mortgage HDFC has evolved into a financial
conglomerate with holdings In:
 HDFC Standard Life insurance Company- HDFC holds 78.07 %.
 HDFC Asset Management Company – HDFC holds 50.1%
 HDFC Bank- HDFC holds 22.25%.
 Intelenet Global (Business Process Outsourcing) – HDFC holds 50%.
 HDFC Chubb General Insurance Company – HDFC holds 74%.

14
 SNAPSHOT-II
 Loan Approvals Rs. 805 billion.
(up to Dec 2007) (US $ 18.30 bn.)
 Loan Disbursements Rs.669 billion
(up to Dec. 2007) (US $ 15.20 bn)
 Housing Units Financed 2.5 million.
 Distribution
 Offices 181
 Outreach Programs 90

KEY PLAYERS

Mr. Deepak S Parekh is the Chairman of the Company. He is also the Executive
Chairman of Housing Development Finance Corporation Limited (HDFC Limited). He
joined HDFC Limited in a senior management position in 1978. He was inducted as a
whole-time director of HDFC Limited in 1985 and was appointed as its Executive
Chairman in 1993. He is the Chief Executive Officer of HDFC Limited. Mr. Parekh is a
Fellow of the Institute of Chartered Accountants (England & Wales).

Mr. Deepak M Satwalekar is the Managing Director and CEO of the Company since
November, 2000. Prior to this, he was the Managing Director of HDFC Limited since
1993. Mr. Satwalekar obtained a Bachelors Degree in Technology from the Indian
Institute of Technology, Bombay and a Masters Degree in Business Administration from
The American University, Washington DC.

15
 GROUP COMPANIES

HDFC Bank: World Class Indian Bank- among the top private banks in India.

HDFC AMC: One of the top 3 AMCs in India- Preferred investment manager.

Intelenet Global: BPO services for international customers.

CIBIL: Credit Information Bureau India Limited.

HDFC Chubb: Upcoming Private companies in the field of General Insurance.

HDFC Mutual Fund

HDFC reality.com: Helps to search properties in all major cities in India

HDFC securities

STANDARD LIFE
Standard Life is Europe’s largest mutual life assurance company. Standard Life, which
has been in the life insurance business for the past 175 years is a modern company
surviving quite a few changes since selling its first policy in 1825. The company
expanded in the 19th century from kits original Edinburgh premises, opening offices in
other towns and acquitting other similar businesses.

Standard Life Currently has assets exceeding over £ 70 billion under its management
and has the distinction of being accorded “AAA” rating consequently for the six years by
Standard and Poor.

16
 SNAPSHOT

 Founded in 1875, company supporting generation for last 179 years.

 Currently over 5 million Policy holders benefiting from the services offered.

 Europe’s largest mutual life insurer.

JOINT VENTURE

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. Reach 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
Poor’s. 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 14 th August 2000.
HDFC is the majority stakeholder in the insurance JV with 81.4% staple and Standard of
as a staple 18.6% Mr. Deepak Satwalekar is the MD and CEO of the venture.
HDFC Standard Life Insurance Company Ltd. Is one of India’s leading Private Life
Insurance Companies, which offers a range of individual and group insurance solutions.
It is a joint venture between Housing Development Finance Corporation Limited (HDFC
Ltd.) India’s leading housing finance institution and the Standard Life Assurance
Company, a leading provider of financial services from the United Kingdom. Both the
promoters are will known for their ethical dealings and financial strength and are thus
committed to being a long-term player in the life insurance industry- all important
factors to consider when choosing your insurer.

BUSINESS GROWTH

17
Track Record so far
The gross premium income of HDFC, for the year ending March 31, 2007 stood at Rs.
2,856 crores and new business premium income at Rs. 1,624 crores.

The company has covered over 8,77,000 lives year ending March 31, 2007. Company
also declared our 5th consecutive bonus in as many years for our ‘with profit’
policyholders.

KEY STRENGTH

Financial Expertise
As a joint venture of leading financial services groups. HDFC standard Life has the
financial expertise required to manage long-term investments safely and efficiently.

Range of Solutions
HDFC SLIC has a range of individual and group solutions, which can be easily
customized to specific needs. These group solutions have been designed to offer
complete flexibility combined with a low charging structure.

Strong Ethical Values:

HDFC SLIC is an ethical and Cultural Organization. False selling or false commitment
with the customers is not allowed.

Most respected Private Insurance Company

HDFC SLIC was awarded No-1 Private Insurance Company in 2004 by the World Class
Magazine Business World for Integrity, Innovation and Customer Care.

CORPORATE OBJECTIVE

Vision

18
'The most successful and admired life insurance company, which means that we are the
most trusted company, the easiest to deal with, offer the best value for money, and set
the standards in the industry'.

'The most obvious choice for all'.

Values

.Integrity
.Innovation
.Customer centric
.People Care One for all
.Teamwork
.Joy and Simplicity

PRODUCTS & SERVICES

The right investment strategies won't just help plan for a more comfortable tomorrow --
they will help you get “Sar Utha ke Jiyo”. At HDFC SLIC, life insurance plans are created
keeping in mind the changing needs of family. Its life insurance plans are designed to
provide you with flexible options that meet both protection and savings needs. It offers
a full range of transparent, flexible and value for money products. HDFC SLIC products
are modern and contemporary unitized products that offer unique customer benefits like
flexibility to choose cover levels, indexation and partial withdrawals. (Source:
www.hdfcslic.com)

PLANS THAT ARE OFFERED BY HDFC STANDARDS LIFE INSURANCE

Individual Products

19
Protection Plans

A person can protect his family against the loss of his income or the burden of a
  loan in the event of his unfortunate demise, disability or sickness. These plans offer
valuable peace of mind at a small price. Protection range includes our Term
Assurance Plan & Loan Cover Term Assurance Plan.
 
Investment Plans

HDFC SLIC’s Single Premium Whole of Life plan is well suited to meet long term
  investment needs. This provides attractive long term returns through regular
bonuses.
 
Pension Plans

Pension Plans help to secure financial independence even after retirement. Pension
 
range includes Personal Pension Plan, Unit Linked Pension, Unit Linked
Pension Plus.
 
Savings Plans

Savings Plans offer a flexible option to build savings for future needs such as buying
a dream home or fulfilling your children’s immediate and future needs.

Savings range includes Endowment Assurance Plan, Unit Linked Endowment,

 
Unit Linked Endowment Plus, Unit Linked Endowment Plus II, Money
Back,
Unit Linked Enhanced Life Protection II, Children's Plan, Unit Linked
Young Star, Unit Linked Young Star Plus, Unit Linked Young Star Plus II.

Group Products

One-stop shop for employee-benefit solutions

20
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. It offers different products for different needs of
employers ranging from term insurance plans for pure protection to voluntary plans
such as superannuation and leave encashment.
HDFC SLIC offers the following group products to esteemed corporate clients:

Group Term Insurance

Group Variable Term Insurance
Group Unit-Linked Plan

An investment solution that provides funding vehicle to manage corpuses with

Gratuity, Defined Benefit or Defined Contribution Superannuation or Leave
 
Encashment schemes of your company
Also suitable for other employee benefit schemes such as salary saving
schemes and wealth management schemes

Social Product

Development Insurance Plan

Development Insurance plan is an insurance plan which provides life cover to members
of a Development Agency for a term of one year. On the death of any member of the
group insured during the year of cover, a lump sum is paid to those member
beneficiaries to help meet some of the immediate financial needs following their loss.

Eligibility
 
Members of the development agency and their spouses with:
    - Minimum age at the start of the policy 18 years last birthday
    - Maximum age at the start of policy 50 years last birthday
Employees of the Development Agency are not eligible to join the group. The group
to be covered is only eligible if it contains more than 500 members.

21
   
Premium Payments
  The premium to be paid will be quoted per member in the group and will be the

same for all members of the group.

The premium can only be paid by the Development Agency as a single lump sum
that includes all premiums for the group to be covered. Cover will not start until the
premium and all the member information in our specified format has been received.

Benefits
  On the death of each member covered by the policy during the year of cover a lump

sum equal to the sum assured will be paid to their beneficiaries or legal heirs. Where
the death is as a result of an accident, an additional lump sum will be paid equal to
half the sum assured. There are no benefits paid at the end of the year of cover and
there is no surrender value available at any time.
   
The role of the Development Agency
  Due to the nature of the groups covered, HDFC Standard Life will be passing certain

administrative tasks onto the Development Agency. By passing on these tasks the
premium charged can be lower. These tasks would include:
  Submission of member data in a specified computer format
Collection of premiums from group members
Recording changes in the details of group members
Disbursement of claim payments and the mortality rebate (if any) to group
members
These tasks would be in addition to the usual duties of a policyholder such as:
Payment of premiums
Reporting of claims
Keeping policy holder information up to date
  Training and support will be available to give guidance on how to complete the tasks
appropriately. Since these additional tasks will impose a burden on the Development
Agency, the Development Agency may charge a Rs. 10 administration fee to their
members.

22
   
Prohibition of rebates
  Section 41 of the Insurance Act, 1938 states
  No person shall allow or offer to allow, either directly or indirectly, as an
inducement to any person to take out or renew or continue an insurance in respect
of any kind of risk relating to lives or property in India, any rebate of the whole or
part of the commission payable or any rebate of the premium shown on the policy,
nor shall any person taking out or renewing or continuing a policy accept any
rebate, except such rebate as may be allowed in accordance with the published
prospectus or tables of the insurer
If any person fails to comply with sub regulation (previous point) above, he shall
be liable to payment of a fine which may extend to rupees five hundred

INTROUCTION TO UNIT LINKED FUNDS

Unit linked plans are based on the component of the premium or the contribution
of the customer towards the plan. This contribution can be in different modes like
yearly, half yearly, quarterly and monthly. Unit linked plans have multiple benefits
like life protection, rider protection, savings, transparency, investment choices,
liquidity and planning for taxes. These plans work like mutual funds.

The premium is collected from the policy holder. He is allotted a certain number of
units based of his contribution. The Net Asset Value is the value of each unit of the
fund. It is found by subtracting the charges and current liabilities from the current
assets and investments and dividing this number by the total number of
outstanding units.

Let us take an example. There are 100 investors and each invests Rs. 10 in a fund.
The total value of the fund is Rs. 1000 and each person is allotted 1 unit of Rs 10.
Now the money (Rs. 1000) is invested in the debt or equity market. Suppose the
fund value increased by 20%. As a result the Rs. 1000 invested became Rs. 1200.
Hence the value of every investor is now Rs. 12 and not Rs. 10.

23
 UNIT LINKED VERSUS OTHER FINANCIAL INSTRUMENTS

Parameters RBI Bonds Fixed Deposits Mutual Funds Unit linked

Safety High High Medium High

Liquidity None High High High

Returns Low Low High High

Life Cover 1 time amount 1 time amount 1 time amount 10 times

Tax benefits Tax free Taxed Taxed Tax free

We find that life insurance unit linked plans is a good area to invest money in as it
provides liquidity, safety, high returns, life cover and tax benefits in a single plan.
HDFC SLIC offers the option of indexation to beat inflation. Risk is reduced to a
large extent as the company invests in a diversified portfolio of stocks.

Tax Benefits

INCOME TAX GROSS ANNUAL HOW MUCH TAX HDFC STANDARD

SECTION SALARY CAN YOU SAVE? LIFE PLANS

Sec. 80C Across All income Upto Rs. 33,990 All the life insurance

Slabs saved on plans.

investment of

24
 Rs. 1,00,000.

Sec. 80 CCC Across all income Upto Rs. 33,990 All the pension plans.

slabs. saved on

Investment of

Rs.1,00,000.

Sec. 80 D Across all income Upto Rs. 3,399 All the health insurance

slabs saved on riders available with the

Investment of conventional plans.

Rs. 10,000.

TOTAL SAVINGS
Rs37,389
POSSIBLE
Rs. 33,990 under Sec. 80C and under Sec. 80 CCC , Rs.3,399 under
Sec. 80 D, calculated for a male with gross annual income
exceeding Rs. 10,00,000.

Sec. 10 (10)D Under Sec. 10(10D), the benefits you receive are completely tax-

free, subject to the conditions laid down therein.

25
 COMPANY PROFILE

OF

TATA AIG LIFE

INSURANCE COMPANY
LTD.

26
 TATA AIG LIFE INSURANCE COMPANY LIMITED

Introduction
Tata AIG Life Insurance Company Limited (Tata AIG Life) is a joint venture company,
formed by the Tata Group and American International Group, Inc. (AIG). Tata AIG Life
combines the Tata Group’s pre-eminent leadership position in India and AIG’s global
presence as the world’s leading international insurance and financial services
organization. The Tata Group holds 74 per cent stake in the insurance venture with AIG
holding the balance 26 percent. Tata AIG Life provides insurance solutions to individuals
and corporate. Tata AIG Life Insurance Company was licensed to operate in India on
February 12, 2001 and started operations on April 1, 2001.

THE TATA GROUP

The Tata Group is one of India's largest and most respected business conglomerates,
with revenues in 2004-05 of $17.8 billion (Rs. 799,118 million), the equivalent of about
2.8 per cent of the country's GDP. Tata companies together employ some 215,000
people. The Group's 32 publicly listed enterprises - among them standout names such
as Tata Steel, Tata Consultancy Services, Tata Motors and Tata Tea - have a combined
market capitalization that is the highest among Indian business houses in the private
sector, and a shareholder base of over 2 million. The Tata Group has operations in more
than 40 countries across six continents, and its companies export products and services
to 140 nations.

AIG
American International Group, Inc. (AIG), world leaders in insurance and financial
services, is the leading international insurance organization with operations in more than
130 countries and jurisdictions. AIG companies serve commercial, institutional and
individual customers through the most extensive worldwide property-casualty and life
insurance networks of any insurer. In addition, AIG companies are leading providers of
retirement services, financial services and asset management around the world. AIG's
common stock is listed on the New York Stock Exchange as well as the stock exchanges
in London, Paris, Switzerland and Tokyo.

27
Tata AIG has strong brand name and recall factor which most of its competitors lack in.
Other than the public behemoth Life Insurance Corporation (LIC) of India which has a
major hold in the market share (of approximately 79%), the private players too are
having more and more opportunities to tighten their hold of the market. Of the private
players, ICICI Prudential comes first with an almost 4.50% of the market share followed
by Tata AIG with about 2.10% of the pie. The private players have everything to work
for, especially with LIC not meeting the needs of its clientele with respect to the services
they need. This provides a prospect for the private sector players to increase their share
of the market. Companies with a familiarity such as Tata AIG can especially achieve
their targets due to the brand image that the Tata group has.
(Source: www.tata-aig-life.com)

A recent survey conducted by the Voluntary Organization in Interest of Consumer

Education (VOICE) revealed Tata AIG Life Insurance Company (Tata AIG Life) as the
clear winner in terms of customer satisfaction in the life insurance category .
This is India's first-ever customer satisfaction study for the insurance sector.

The survey also revealed that Tata AIG Life had a high recall as a reputed brand name.
The ability to provide innovative and customer-focused service such as allowing the
maximum grace period for premium payment has not only further distinguished Tata
AIG Life from other life insurance companies but also appealed to consumers.

28
PRODUCTS & SERVICES:
Corporate life insurance products:
 Employee Benefits
 Credit Life
 Group Pensions
 Workplace Solutions
Individual life insurance products:
 Health First
 Health Protector
 Mahalife
 InvestAssure II, InvestAssure Gold
 Shubh life, Nirbhay life

With respect to individual life insurance products, Tata AIG has an array of policies to
suit the needs and requirements of all age groups viz, children, students, adults, retirees
etc.

The ‘SUPPORT’ arm of Tata AIG Life is constituted of Operations, Human Resources,
Marketing, Corporate Training, Finance and Compliance.

Tata AIG Life possesses the philosophy and drive to customize retirement obligations
(for the company) which occur in the form of cash outflows, for the maximum benefit of
both the employer and the departing employee.

29
 POINTS OF PARITY
AND
POINTS OF DIFFERENCE
BETWEEN
HDFC SLIC AND TATA AIG

30
 Points of Parity

Funds available with ULIP Plans

General Description Nature of Investments Risk Category

Primarily invested in company

Equity Funds stocks with the general aim of capital High
appreciation
Invested in corporate bonds,
Income, Fixed Interest
government securities and other fixed Medium
and Bond Funds
income instruments
Sometimes known as Money
Cash Funds Market Funds — invested in cash, bank Low
deposits and money market instruments

Combining equity investment

Balanced Funds Medium
with fixed interest instruments

Generally all life insurance companies have three types of fund which are Equity fund,
Debt fund and Balance fund. These fund have different risk profile. Equity fund has high
risk but it gives high return, Debt fund has low risk so it gives low return and Balanced
fund is combination of both Equity and Debt fund so risk is medium and return is also
low.
Both HDFC SLIC and Tata AIG LIC have 7 types of funds based on combination of Debt–
Equity fund. These are liquid fund, stable managed fund, secure managed fund,
defensive managed fund, balanced managed fund, equity managed fund, growth fund.

Indexation
You have the option to increase your regular premiums by an indexation rate at any
policy anniversary to protect the real value of your investment against inflation. The rate
of indexation will be in line with the increase in the Whole Sale Price Index (or in the
event that this Index ceases to be published such other index as the Company may
select for this purpose). The base sum assured and sum assured of any attached rider
would also be increased by the corresponding indexation increase.

31
 Charges, Fees and Deductions in ULIP

 Premium Allocation Charge

This is a premium-based charge. After deducting this charge from premiums, the
remainder is invested to buy units. The Allocation charges are guaranteed for the entire
duration of policy term.

 Mortality Charge

The Mortality Charge will apply on the Sum at Risk (SAR = Sum Assured less the Fund

Value pertaining to regular premiums). It will be deducted by monthly cancellation of

units from the accumulation unit account. The Mortality Charge shall remain guaranteed

throughout the policy term.

 Fund Management Charge

1% p.a. on With Profits Fund, 1% p.a. on Debt Fund, 1.25% p.a. on Balanced Fund and

1.50% p.a. on Growth Fund. FMC will be applied on the fund while calculating NAV on a

daily basis. The maximum FMC on any fund is 2% p.a. subject to prior approval by the

IRDA.

 Policy Administration Charge

Rs. 60 per month, which will increase by 5% p.a. on the 1st of January each year. PAC

will be deducted monthly by cancellation of units from the accumulation unit account. If

premiums are discontinued, this charge would reduce to 60% of the charge applicable

for the premium paying policies

 Surrender Charge

32
This is the charge that applies when the policy is surrendered. It is equal to 50% of the
difference between regular premiums expected and those paid in the first year of the
contract.

 Service Tax Deductions

12.36% service tax is applicable on the first premium of life insurance policy.

Tax Benefits

Tax benefits will be as per Section 80C & Section 10(10D) of the Income Tax Act, 1961.
Insurance is tax free up to Rs. 100000 per annum and the returns on investment on
maturity of the policy are also tax free.

Riders and Bonuses

HDFC Standard Life Tata AIG Life

 
Insurance Insurance
Free Look Period 15 days 15 days
Based on company's Based on company's
Reversionary Bonus
performance performance
Based on company's Based on company's
Terminal Bonus
performance performance
TOP UP Minimum Rs. 5000 Minimum Rs. 5000
 
Riders    
Gives on diagnosis of Gives on diagnosis of
Critical Illness (CI)
anyone anyone
Benefit
of 6 critical illness of 12 critical illness
Additional Term Benefit
Provides Provides
(ATB)
Accidental Death Benefit
Provides Provides
(ADB)
Double Benefit Provides Does not provide
Triple Benefit Provides Does not provide
Payer Benefit Rider (PBR) Does not provide Provides
Waiver of Premium
Provides Provides
(WOP) Benefit

33
 Points of Difference

HDFC Standard Life Tata AIG Life

 
Insurance Insurance
Grace Period 15 days 31 days
Policy Administration
Rs. 60 per month Rs. 55 per month
Charge
10% on sum-assured
Guaranteed Bonus Does not give
after 10 year
0.25% after every 4th
Loyalty Bonus 0.1% every year
year
Total 24 free switches in a
4 free switches per year
policy
Fund Switching Charge after this
after this Rs. 100 per
Rs. 250 per switch
Switch
50% of all premium 30% of all premium
Guaranteed Surrender
paid excluding 1st paid excluding 1st
value
premium premium
Fund Management 0.80% per annum 1.75% per annum
Charge on the fund value on the fund value
First 2 Premium
Total 12 free Premium
Redirection in a
Redirection
Premium Redirection year is free after this
in a policy after this Rs.
Charge Rs. 1000
250 per Premium
per Premium
Redirection
Redirection
Last Year Return 42.70% 72%

We see that both the life insurance companies’ products are almost same. They
have same charges, fees and deductions. There is slightly difference in charges
and maximum limits of all charges are fixed by IRDA. Before buying any life
insurance policy one should check charges and fees on policy and company’s
overall performance and return given to its consume

34
COMPETITIVE

ANALYSIS

35
 COMPETITIVE ANALYSIS

LIFE INSURANCE CORPORATION OF INDIA (LIC)

LIC has an excellent money back policy which provides for periodic payments of partial
survival benefits as long as the policy holder is alive. 20% of the sum assured is payable
after 5, 10, 15 and 20 years and the balance 40% is payable at the 20 th year along with
accrued bonus. (www.lic.com)

For a 25 years term , 15% of the sum assured becomes payable after 5,10,15 and 20
years and the balance 40% plus the accrued bonus becomes payable at the 25 th year.
An important feature of these types of policies is that in the event of the death of the
policy holder at any time within the policy term the death claim comprises of full sum
assured without deducting any of the survival benefit amounts which have already been
paid. The bonus is also calculated on the full sum assured.

HDFC SLIC does not have a money back policy. It could offer a money back plan and
capture some portion of this market. While marketing insurance products I found that
many customers wanted to purchase these plans.

LIC offers 66 different plans; plans are formulated for specific occasions – whole life
plans, term assurance plans, money back plan for women, child plans, plans for the
handicapped individuals, endowment assurance plans, plans for high worth individuals,
pension plans, unit linked plans, special plans, social security schemes – diversified
portfolio of products. HDFC SLIC could diversify its product portfolio. It could add more
plans for high worth individuals and women.

ICICI PRUDENTIAL
ICICI Prudential is a stiff competitor for HDFC SLIC. The company is a merger between
ICICI Bank which is the biggest private bank in India and Prudential Plc which is a global
life insurance company.

36
The company has an investment plan which is market related – Invest Shield Life. In
this plan even if the market falls, the premium will be returned to investors. It is a
guaranteed plan which ensures the company carefully invests your money. The stock
market performance of ICICI Prudential is much better than HDFC SLIC. The returns on
the growth fund were 46.28% compared to the 42.70% offered by HDFC SLIC.
Customers are attracted by higher returns and this is a plus point for Prudential.

The company is very well advertised. The advertisements are showcased in movies,
television, newspapers, magazines, bill boards, radio etc. The company has an excellent
brand ambassador – Mr. Amitabh Bacchan. His promotion of the company builds trust
and faith in the minds of our people.

However the charges are very high in the plans offered by ICICI Prudential. It is 35%
during the first year, 15% in the next year and 3% from the third year onwards. Also a
higher minimum premium of Rs. 8000 is charged. Hence the policies are not accessible
to the lower strata of the society. (Source: www.iciciprulife.com)

BIRLA SUN LIFE

Birla Sun Life Insurance Company Limited is a joint venture between The Aditya Birla
Group, one of the largest business houses in India and Sun Life Financial Inc., a leading
international financial services organization. The local knowledge of the Aditya Birla
Group combined with the expertise of Sun Life Financial Inc., offers a formidable
protection for your future. (Source: www.birlasunlife.com)

The Aditya Birla Group has a turnover close to Rs. 33000 crores with a market
capitalization of Rs. 53400 crores (as on 31st March 2007). It has over 72000 employees
across all its units worldwide. It is led by its Chairman - Mr. Kumar Mangalam Birla.
Some of the key organizations within the group are Hindalco and Grasim.

37
Sun Life Financial Inc. and its partners today have operations in key markets worldwide,
including Canada, the United States, the United Kingdom, Hong Kong, the Philippines,
Japan, Indonesia, India, China and Bermuda. It had assets under management of over
US$343 billion, as on 31st March 2007. The company is a leading player in the life
insurance market in Canada.

Being a customer centric company, BSLI has invested heavily in technology to build
world class processing capabilities. BSLI has covered more than a million lives since
inception and its customer base is spread across more than 1000 towns and cities in
India. All this has assisted the company in cementing its place amongst the leaders in
the industry in terms of new business premium income. The company has a capital base
of 520 crores as on 31st July, 2007.

Its Flexi Life Line Plan offers life long insurance cover till the policy holder is 100 years
of age. There are guaranteed returns of 3% p.a. net of policy charges after every 5
years from the eleventh policy year onwards. However the charges are very high. The
initial charges for the first year are 65%. Hence the fund value is greatly reduced.

BAJAJ ALLIANZ
Bajaj Allianz is a joint venture between Allianz AG with over 110 years of experience in
over 70 countries and Bajaj Auto, a trusted automobile manufacturer for over 55 years
in the Indian market. Together they are committed to offering you financial solutions
that provide all the security you need for your family and yourself. Bajaj Allianz is the
number one private life insurer for the year 2005 – 2006. It is leading by 78 crores. It
has experienced a whopping growth of 216% in the last financial year.

The company has sold 13, 00,000 policies and is backed by 550 offices across India. It
offers travel insurance, motor insurance, home insurance, health and corporate
insurance. The mortality charges are lower than HDFC SLIC. The entry age could be
zero years which allow even new born babies to be insured. (Source:
www.bajajallianz.com)

38
TATA AIG

Tata Aig is a joint venture between the Tata group and American International Group
Inc. In one of the plans the company offers hospital cash benefit wherein it will pay Rs.
2500 per day in case of hospitalization and Rs.12.5 lakhs in case the person suffers from
any critical illness. Annual premium is much less (about Rs. 6712) to avail such a good
benefit. Charges are relatively low compared to HDFC SLIC for some policies.

The company offers high coverage plans at low cost. There is a plan even for a policy
term of 1 year. Your family can continue to enjoy their current lifestyle even in the case
of something happening to you. These plans are very flexible and HDFC SLIC could
adopt this idea of insuring individuals for short periods of time. For example; there is a
family of four. The only earning member is the father.

He has just taken a loan from a bank of 20 lakhs to purchase a new home. He is able to
repay the loan with his current salary in 15 years. The problem arises if something were
to happen to him within these fifteen years. Not only will the family face the emotional
and financial loss of their father but they will also have to repay the home loan or risk
being homeless. (Source: www.tataaig.com)

39
MARKETING

PROBLEMS

40
 MARKETING PROBLEMS

The old and out dated technique of tele marketing is used to prospect customers. More
modern techniques must be adopted. The company must sponsor shows and give
presentations in corporate houses. The financial health check must be performed for
every prospect to assess his/her true financial position and needs. Some of the advisors
skip this vital step and the prospect ends up with a plan they do not appreciate and
soon surrender or discontinue.

Some of the main problems in marketing the policies are:

 Large amount of competition (18 players in the market)

 Other brands are well advertised and have higher recall value

 LIC is considered a safer option

 Face competition from banks and mutual funds

 High premium policies are difficult to market

 Incorrect perception about insurance

 Interested prospects might have a lack of time and postpone investments

 Customers get defensive if you cold call

 Short term plans are available only at large premium

 Customers do not have risk appetite to invest in shares

 Some prospects have already invested and are not interested in further

investments

 Consumers don’t want to undertake medical examinations

 Large amount of documentation

 Customers do not like their money locked up for many years

 Lack of awareness about the unit linked funds in the market

 No money back plan present in the product portfolio

41
SUGGESTIONS FOR IMPROVEMENT

 Advertise about the company and its products – it motivates individuals to

purchase insurance

 Create a positive perception about insurance

 Speak about the good features a plan offers like high returns, life cover, tax

benefits, indexation, accident cover while prospecting customers

 Try to sell the product/plan which the consumer requires and not the plan where

the advisors benefit is higher

 Improve the efficiency in operations

 Bring out policies with small premiums payable for short periods of time – Rs.

5000 – Rs. 10000 per annum for 10 years

 Attract the youth of India with higher returns on investment as returns are the

motivating factor which influence purchase of insurance

 Promote insurance in colleges and corporate houses

 Promote HDFC SLIC as an Indian Company to build trust

 HDFC SLIC could have a brand ambassador or a mascot to promote its services

 Should have partial withdrawals from the first year onwards

 Tap the rural market where there is large potential

 Diversify product portfolio

 Make products more straight forward – reduce complexities

42
 RESEARCH
METHDOLOGY

43
 RESEARCH DESIGN

INTRODUCTION
A Research Design is the framework or plan for a study which is used as a guide in
collecting and analyzing the data collected. It is the blue print that is followed in
completing the study. The basic objective of research cannot be attained without a
proper research design. It specifies the methods and procedures for acquiring the
information needed to conduct the research effectively. It is the overall operational
pattern of the project that stipulates what information needs to be collected, from which
sources and by what methods.

TITLE OF THE STUDY

“To Compare the products of HDFC Standard Life Insurance Company Limited
and Tata AIG Life Insurance Company Limited for HDFC Standard Life
Insurance Company Ltd.”

STATEMENT OF THE PROBLEM

This study was undertaken to identify which type of insurance plans HDFC SLIC should
market to beat Tata AIG LIC in India. A survey was undertaken to understand the
preferences of Indian consumers with respect to insurance. While marketing policies the
sole duty of an advisor/ agent is to provide insurance plans as per customer
requirements.

44
In effect plans (insurance products) should be flexible to suit individual requirements.
This research tries to analyze some key factors which influence the purchase of
insurance like the term of the policy, the type of company, the amount of annual
premium payable (capacity and willingness to spend), risk taking ability and the
influence of advertising. Solutions and recommendations are made based on qualitative
and quantitative analysis of the data.

OBJECTIVES OF THE STUDY

 To analysis the product details of HDFC Standard life Insurance Company

limited and Tata AIG life Insurance Company Limited.

 To find ‘Points of Parity’ and ‘Points of Difference’ of HDFC Standard Life

Insurance Company Limited and Tata AIG Life Insurance Company Limited.

 To find out factors that influence customers to purchase insurance policies

and give suggestions for further improvement.

RESEARCH METHODOLOGY

TYPE OF DATA COLLECTED

There are two types of data used. They are primary and secondary data. Primary data is
defined as data that is collected from original sources for a specific purpose. Secondary
data is data collected from indirect sources. (Source: Research Methodology, By C. R.
Kothari)

PRIMARY SOURCES

These include the survey or questionnaire method, telephonic interview as well as the
personal interview methods of data collection.

45
SECONDARY SOURCES

These include books, the internet, company brochures, product brochures, the company
website, competitor’s websites etc, newspaper articles etc.

SAMPLING

Sampling refers to the method of selecting a sample from a given universe with a view
to draw conclusions about that universe. A sample is a representative of the universe
selected for study.

SAMPLE SIZE
The sample size for the survey conducted was 270 respondents. This sample size was

taken on 95% confidence level and 6 significant level. Data universe for this sample is

10,00,000 which is approx population of Jodhpur excluding people below age of 18

years.

SAMPLING TECHNIQUE

Random sampling technique was used in the survey conducted.

PLAN OF ANALYSIS

Tables were used for the analysis of the collected data. The data is also neatly
presented with the help of statistical tools such as graphs and pie charts. Percentages
and averages have also been used to represent data clearly and effectively.

STUDY AREA

The samples referred to were residing in Jodhpur City. The areas covered were Shastri
Nagar, Sardarpura, Masuriya, Subhash Nagar, City Area and Kamla Nehru Nagar.

46
 OVERVIEW OF CHAPTER SCHEME

CHAPTER 1:

Introduction to insurance - An overview of the industry in India, history, key

milestones, reforms in the industry, present scenario in India.

CHAPTER 2:

Research Design - Introduction, title of the study, statement of the problem,

objectives of the study, research methodology, sampling, plan of analysis and study
area.

CHAPTER 3:

Company profile of HDFC SLIC – Introduction of HDFC SLIC, products and

services, vision and core values, human resource, organizational structure,
introduction to unit linked funds, national & international presence of the
organization.

CHAPTER 4:

Company profile of Tata AIG – Introduction of Tata AIG, products and services,
vision and core values. The advantages of investing in HDFC SLIC compared to other
financial instruments.

CHAPTER 5:

47
Points of Parity and Points of Difference between HDFC SLIC and Tata AIG
LIC – Comparison between different plans, charges, fees, deductions and riders
available with HDFC SLIC and Tata AIG LIC

CHAPTER 6:
Competitive analysis – Information about the plans offered by LIC and other
private insurers in India. Comparisons between the plans to find the most popular
and beneficial plans which HDFC SLIC can incorporate into their product portfolio.

CHAPTER 7:

Marketing problems - The techniques used to market insurance and their

advantages and disadvantages along with suggestions for improvement.

CHAPTER 8:
Analysis and Interpretation – A survey on factors that influence people to
purchase Life Insurance Policy.

CHAPTER 9:
Problems requiring more research – Future line of work

CHAPTER 10:
Conclusion

References
Appendices

48
49
 ANALYSIS

&

INTERPRETATION

50
ANALYSIS & INTERPRETATION
“A SURVEY ON THE LIFE INSURANCE INDUSTRY IN INDIA”

AGE GROUP OF SURVEYED RESPONDENTS

TABLE 1:

Age group No. of Respondents

18 - 25 years 127
26 - 35 years 67
36 - 49 years 46
50 - 60 years 24
More than 60 years 6

CHART 1:

Analysis:

51
From the chart above we find that 47% of the respondents fall in the age group of 18 –
25 years, 25% fall in the age group of 26 – 35 years and 17% fall in the age group of
36 – 49 years.

Therefore most of the respondents are relatively young (below 26 years of age). These
individuals could be induced to purchase insurance plans on the basis of its tax saving
nature and as an investment opportunity with high returns.

Individuals at this age are trying to buy a house or a car. Insurance could help them
with this and this fact has to be conveyed to the consumer. As of now many consumers
have a false perception that insurance is only meant for people above the age of 50.
Contrary to popular belief the younger you are the more insurance you need as your
loss will mean a great financial loss to your family, spouse and children (in case the
individual is married) who are financially dependent on you.

GENDER CLASSIFICATION OF SURVEYED RESPONDENTS

TABLE 2:

Particulars No. of Respondents

Male 193
Female 77

CHART 2:

52
 CUSTOMER PROFILE OF SURVEYED RESPONDENTS
TABLE 3:
Customer profile No. of respondents
Student 62
Housewife 5
Working Professional 116
Business 49
Self Employed 24
Government service employee 14

CHART 3:

53
Analysis:
From the chart above it can clearly be seen that 43% of the respondents are working
professionals, 23% are students and 18% are into business. Therefore the target
market would be working individuals in the age group of 18 – 25 years having surplus
income, interested in good returns on their investment and saving income tax.

NO. OF RESPONDENTS WHO HAVE LIFE INSURANCE POLICY IN THEIR NAME

TABLE 4:
Person who have life insurance policy
Yes 103
No 167

CHART 4:

54
ANALYSIS:
This graph shows that out of total 270 respondents only 103 or 38% respondents have
life insurance policy in their name. Rest all don’t have a single policy in their name. So
there is a very big scope for life insurance companies to cover these people. So in future
business of life insurace will gro further.

MARKET SHARE OF LIFE INSURANCE COMPANIES

TABLE 5:

LIFE INSURER NUMBER OF POLICIES

HDFC STANDARD LIFE 4
BIRLA SUN LIFE 3
AVIVA LIFE INSURANCE 6
BAJAJ ALLIANZ 7
LIC 55

55
 TATA AIG 6
ICICI PRUDENTIAL 12
ING VYSYA 6
BHARTI AXA 2
OTHERS 2

CHART 5:

Analysis:
In India, the largest life insurance company is Life Insurance Corporation of India. It has
been in existence in India since 1956 and is completely owned by the Government of
India. Today the organization has grown to 2048 offices serving 18 crore policies and
has a corpus of over 340000 crore INR.

ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE

TABLE 6:

Premium paid (p.a.) No. of respondents

56
 Rs. 5000 - Rs. 10000 40

Rs. 10001 - Rs. 15000 26

Rs. 15001 - Rs. 24900 18

Rs. 25000 - Rs. 50000 10

Rs. 50001 - Rs. 60000 4

Rs.60001 - Rs. 80000 2

Rs. 80001 - Rs. 100000 3

CHART 6:

ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE

Analysis:
From the chart above we find that, 39% of the respondents surveyed pay an annual
premium less than Rs. 10001 towards life insurance. 25% of the respondents pay an
annual premium less than Rs. 15001 and 17% pay an annual premium less than Rs.
25000. Hence we can safely say that HDFC SLIC would be able to capture the market

57
better if it introduced products/plans where the minimum premium starts at Rs. 5000
per annum.
Only 19% of the respondents pay more than Rs. 25000 as premium and most products
sold by HDFC SLIC have Rs.12000 as the minimum annual premium amount. They
should introduce more products like Easy Life Plus and Safe Guard where the minimum
premium is Rs.6000 p.a. and Rs. 12000 p.a. respectively. This would definitely increase
their market share as more individuals would be able to afford the policies/plans offered.

POPULAR LIFE INSURANCE PLANS

TABLE 7:

Type of Plan No. of Respondents

Term Insurance Plans 105

58
 Endowment Plans 122
Pension Plans 16
Child Plans 8
Tax Saving Plans 19
CHART 7:

POPULAR LIFE INSURANCE PLANS

Analysis:
From the chart given above we can clearly see that 45% of the respondents hold
endowment plans and 39% of the respondents hold term insurance plans. Endowment
plans are very popular and serve two purposes – life cover and savings.
If the policy holder dies during the policy term the nominee gets the death benefit that
is, sum assured and accumulated bonus. On survival the policy holder receives the
survival benefit with a bonus.

A term plan is a pure risk cover plan wherein the insured pays a lower premium for a
higher sum assured. Term insurance is the cheapest form of insurance and helps the
policy holder insure himself for a relatively low premium. For the returns sensitive
investor term plans do not find favor as they do not offer a return in case the individual
does not die during the policy term.

59
 AWARENESS OF UNIT LINKED INSURANCE PLANS

TABLE 8:

Awareness of Unit Linked Plans No. of Respondents

Yes 154
No 116

CHART 8:

AWARENESS OF UNIT LINKED INSURANCE PLANS

Analysis:
From the chart given above we find that 57% of the respondents are aware of unit
linked life insurance plans and 43% are not aware of such plans. These plans should be
promoted through advertising. The company can advertise through television, radio,
newspapers, bill boards and pamphlets. This would increase awareness and arouse
curiosity in the minds of the consumer which would enable the company to market its
products more effectively.

60
Unit – linked plans 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 a customer would get would depend on the unit price when
they pay the premium.

When the policy matures the individual gets his fund value. The value of his fund is
calculated by multiplying the net asset value and number of units held by them on that
day.

CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM

TABLE 9:

Willingness to spend on premium No. of respondents Percentage

Less than Rs. 6,000 41 15%

Rs. 6,001 - Rs. 10,000 73 27%

Rs. 10,001 - Rs. 25,000 110 41%

Rs. 25,001 - Rs. 50,000 41 15%

Rs. 50,001 - Rs. 1,00,000 5 2%

CHART 9:

CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM

61
Analysis:
From the graph above, we can clearly see that 41% of the respondents would be willing
to spend between Rs. 10001 – Rs. 25000 for life insurance. 27 % would be willing to
spend between Rs. 6001 – Rs. 10000 per annum. Only 15% would be willing to spend
more than Rs. 25000 per annum as life insurance premium.

We could say that the maximum premium payable by most consumers is less than Rs.
25000 p.a. This is further reduced as most customers have already invested with LIC,
ICICI Prudential, Birla Sun Life, Bajaj Allianz etc.

HDFC SLIC is faced with a large amount of competition. There are 18 insurance
companies in India inclusive of LIC. Hence to capture a larger part of the market the
company could introduce more reasonable plans with lesser premium payable per
annum.

CHART SHOWING IDEAL POLICY TERM

TABLE 10:

Ideal policy term No. of respondents

3 - 5 years 51
6 - 9 years 41
10 - 15 years 95

62
 16 - 20 years 38
21 - 25 years 24
26 - 30 years 5
More than 30 years 3
Whole life Policy 13

CHART 10:

CHART SHOWING IDEAL POLICY TERM

Analysis:
From the chart given above it can be seen that 35% of the respondents prefer a policy
term of 10 – 15 years, 19% prefer a term of 3 – 5 years and 15% prefer a term of 6 – 9
years. This means that HDFC SLIC could introduce more plans wherein the premium
paying term is less than 15 years.

63
The outlook of insurance as a product should be changed from something which you
pay for your whole life (whole life policy) and do not receive any benefit (the nominee
only receives the benefit in case of your death) to an extremely useful investment
opportunity with the prospects of good returns on savings, tax saving opportunities as
well as providing for every milestone in your life like marriage, education, children and
retirement.

FACTORS THAT MOTIVATE RESPONDENTS TO PURCHASE INSURANCE

TABLE 11:

Parameter No. of Respondents

Advertisements 35
High returns 84
Advice from friends 46
Family responsibilities 89
Others 16

CHART 11:

Analysis:

64
From the chart above it can be seen that 33% of the respondents purchase life
insurance to secure their families, 33% take life insurance to get high returns, 17%
purchase insurance on the advice of their friends and 13% purchase insurance because
of the influence of advertisements.

The main purpose of insurance is to cover the financial or economic loss that occurs to
the family in case of the uncertain death of the policy holder. But now a days this trend
is changing. Along with protection (life cover), a savings element is being added to
insurance.

With the introduction of the new unit linked plans in the market, policy holders get the
option to choose where their money will be invested. They can invest their money in the
equity market, debt market, money market or a combination of these. The debt and
money markets usually have low risk attached whereas the equity market is a high risk
investment option.

PREFERRED COMPANY TYPE OF THE RESPONDENTS

TABLE 12:

Type of Company No. of Respondents Percentage

Government Owned Company 127 47%

Public Limited Company 62 23%

Private Company 49 18%

Foreign Company 32 12%

CHART 12:
PREFERRED COMPANY TYPE OF THE RESPONDENTS

65
Analysis:
From the graph above we find that 60% of the respondents preferred to purchase
insurance from a government owned company, 29% of the respondents preferred to
purchase insurance from a public limited company and only 4% of the respondents
preferred a foreign based company. Heavy advertising through television, newspapers,
magazines and radio is required.

MINIMUM EXPECTED RETURN ON INVESTMENT

TABLE 13:

Expected Returns No. of respondents

Less than 5% 5
5% - 10% 39
11% - 15% 46
16% - 20% 49
21% - 25% 46
26% - 30% 27
31% - 40% 22
41% - 50% 14
More than 50% 22

CHART 13:

66
Analysis:
From the chart above it can clearly been seen that 18% of the respondents would like
16 – 20% returns, 17% would like returns between 21 – 25% and 17% would like
returns of 11 – 15% on their investments. Therefore the average return on investment
should be at least 16 – 20 %.

Most consumers are willing to adapt to some amount of risk but still want some
guaranteed returns. Therefore the bulk of investment should be made in the balanced
fund with 50% debt and 50% equity. The returns on the Secure Fund are guaranteed as
these involve investment is government securities and the debt market. But the returns
on these instruments are low (8 – 10%). If the company invests in shares, returns are
higher (39%) but correspondingly risk borne by the policy holder is also higher.
Therefore a good combination of the two instruments is often a wise choice.

67
FUTURE LINE OF

RESEARCH

68
69
 FUTURE LINE OF RESEARCH

The future topics for research in the organization could be setting up of an appropriate
ad campaign. It is very vital to the companies’ success that the people of India know
about HDFC SLIC, its products and their special features and how insurance in general
can help them in their future. The advertisements have to be emotionally appealing.
They might also include a celebrity. The brand name of HDFC could be used to give a
push to HDFC SLIC and its products. The general perception of insurance as
“inauspicious” should be done away with and individuals and corporations accept
insurance on power with other investment opportunities.

The other area of research could be in the management of funds HDFC SLIC possesses
and how it can maximize returns for its investors. A research project could be
undertaken on how to ensure that the money gets invested in the right companies and
earns a medium – high return on investment. Another area of research could be an
analysis of the sales and marketing techniques used by HDFC SLIC. A large number of
changes could be introduced and this would help in saving operating costs and
improving the efficiency of the firm.

70
CONCLUSION

71
 CONCLUSION

HDFC standard life insurance is first life insurance company in India. It has businesses
spread out across the globe. It was registered on 23 rd December 2000. It currently ranks
number 4 amongst the insurers in India (Source: annual premium provided by the
company)

The company faces a large amount of competition. To sustain itself it must promote its
products through advertising and improve its selling techniques. Consumers must be
aware of the new plans available at HDFC SLIC. The medium of advertising used could
be television since most of its competitors use this tool to promote their products. The
company must be promoted as an Indian company since consumers seem to have more
trust in investing in Indian firms.

The unit linked concept must be specifically promoted. The general perception of life
insurance has to change in India before progress is made in this field. People should not
be afraid to invest money in insurance and must use it as an effective tool for tax
planning and long term savings.

HDFC SLIC could tap the rural markets with cheaper products and smaller policy terms.
There are individuals who are willing to pay small amounts as premium but the plans do
not accept premiums below a certain amount. It was usually found that a large number
of males were insured compared to females. Individuals below the age of 30 (mostly
male) were interested in investment plans. This was a general conclusion drawn during
prospecting clients.

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 REFERENCES

www.hdfcslic.com

www.tata-aig-life.com

www.irdaindia.com

www.lic.com

www.money control.com

www.bajajallianz.com

www.icici.prulife.com

Magazine –

Insurance World

The Outlook Money

Secrets of Successful Insurance Sales by Mr. Jack Kinder

73
 A SURVEY ON ‘INSURANCE INDUSTRY’

Dear Sir/Madam,

I am a student of Aravali Institute of Management, Jodhpur. As part of the requirements

for my Post Graduation Diploma in Management I am required to do a research based
project. Kindly spend a few minutes of your valuable time and fill in this questionnaire.

Do you have a life insurance policy/investment plan

in your name?

o Yes o No

If yes which company’s insurance policies do you

hold?
o Aviva Life
o HDFC Standard Life Insurance
Insurance o Bajaj Allianz Life
o Birla Sun Life Insurance
Insurance o LIC
o Tata AIG Life o ING Vysya Life
Insurance Insurance
o ICICI Prudential o Bharti Axa Life
Life Insurance Insurance
o Others (specify name)

What is the approximate premium paid by you

annually (in Rupees)?

o Rs. 5,000 – Rs. o Rs. 50,001 – Rs.

10,000 60,000
o Rs. 10,001 – Rs. o Rs. 60,001 – Rs.
15,000 80,000
o Rs. 15,001 – Rs. o Rs. 80,001 – Rs.
25,000 1,00,000
o Rs. 25,001 – Rs.
50,000
o More than Rs. 1,00,000 (specify premium)

What kind of insurance policy would suit you best in

your current stage of life?
o Life Insurance o Pension Plans
o Life Insurance and o Child Plans
Investment Plans

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 o Tax saving plans

Are you aware of the new unit linked insurance plans

in the market?

o Yes o No

How much would you be willing to spend per annum

if you were to go for an investment/insurance plan?

o Less than Rs. 6,000 Rs. 25,001 – Rs.

o
o Rs. 6,001 – Rs. 50,000
10,000 o Rs. 50,000 – Rs.
o Rs. 10,001 – Rs. 1,00,000
25,000 o More than Rs.
1,00,000
Which according to you is an ideal policy term?
(Number of years you would be willing to pay
premium)

o 3 to 5 years o 21 to 25 years
o 6 to 9 years o 26 to 30 years
o 10 to 15 years o More than 30 years
o 16 to 20 years o Whole life policy

What motivates you to purchase

insurance/investment plans?

o Advertisements o Advice from friends

o High Returns o Family
responsibilities
o Others (specify)

In which kind of company would you prefer to make a

purchase of insurance?

o Government o Private Company

owned company o Foreign based
o Public Limited company
Company

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Typically what kind of returns would you look at from
your investments? (Please note: Higher returns
involve greater risk)

o Less than 5% o 26% - 30%

o 6% - 10 % o 31% - 40%
o 11% - 15 % o 41% - 50%
o 16% - 20 % o More than 50%
o 21% - 25%

Personal Details:

Name:

Address:

Age: Contact No. :

Profile of respondent:
 Student  Business
 Housewife  Self – Employed
 Working  Government
Professional Service Employee

Date:

76