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Life insurance is a contract providing for payment of a sum of money to the person assured or, failing him, to the person entitled to receive the same, on the happening of a certain event. A family is generally dependent for its food, clothing and shelter on the income brought by the family¶s breadwinner. The family is secure so long as this breadwinner is alive and is capable of earning his income. A sudden death (or inability) may leave this family in a financially difficult situation. Uncertainty of death is inherent in human life. This uncertainty makes it necessary to have some protection against the financial loss arising from death. And life insurance exactly offers this kind of protection.
The idea of insurance had emanated from out of the needs and desires of people to cover the likely losses to be suffered during a person¶s lifetime. Insurance was initially restricted to cover items other than for a person¶s life. Today insurance covers almost everything. Life insurance had commenced under framework of societies formed for purpose of giving service to the members in case of sickness, unemployment and premature deaths. Following a death, the need for immediate finance was felt to have a ³Decent funeral´. Over a period of time, the financial loss due to the demise of the breadearner was extended to cover future needs too. In the Indian context, the Aryans had perceived the idea of community insurance more than 3000 years ago, as would be evident from the ³Reeg Veda´, in which the word ³Yogakshema´ was meant to suggest some form of communities had existed to help out family of the deceased in building a house, protecting the widow and also marrying off the girls.
BRIEF HISTORY OF INSURANCE:
The business of insurance started with marine business. The first policy providing temporary life assurance cover for a period of 12 months was issued as early as 1583 A.D. in England. In India, Insurance began in 1870 with life insurance being transacted by an English company, the European and the Albert. The first Indian Insurance Company was the Bombay Mutual Assurance Society Ltd, formed in 1870. That was followed by the Oriental Life Assurance Co. in 1874, the Bharat in 1896 and the Empire of India in 1897. By the year 1956, when the life insurance business was nationalized and the Life Insurance Corporation of India (LIC) was formed on 1st September 1956, there were 170 companies and 75 provident fund societies transacting life insurance business in India. By 31.03.2002, eleven new insurers had been registered and had begun to transact life insurance business in India.
NEED FOR INSURANCE :
When we consider some form of general insurance contracts like fire insurance, it presupposes the paramount need to have a protection through insurance. But it is not so simple to define financial loss following the loss of human life. In life insurance, the concept of indemnity is applied with some modifications. The concept of Human Life Value (HLV) helps us in determining the sum for which a person needs life insurance.
PRINCIPLES OF LIFE INSURANCE:
Life insurance policy is an evidence of contract between the insurer and the policy holder. Like any other contract, the policy has the following essential elements :
Offer and acceptance :
The proposal form is the other letter by the proposer and the insurer accepts it.
The proposer pays the premium to receive the reciprocal benefit of the claim money.
Capacity to contract :
The proposer has to fulfill certain eligibility conditions, e.g., he must be a major.
Consensus ³ad idem´ :
The proposer has to understand the implication of the plan, premium, etc. and the insurer must be equipped with all the necessary information regarding the proposer, so that there is no ambiguity regarding the terms of the contract.
Legality of the object or purpose :
The motive should be insurance in the true sense of the term and it should not have any element of wager or gambling.
Capability of performance :
The agent will have to have the ability to perform well.
Intention to create legal relationship :
Besides the general essentials of a valid contract, insurance involves two additional principles. They are (a)Principle of utmost good faith. (b)Principle of Insurable Interest
ROLE OF INSURANCE IN ECONOMIC DEVELOPMENT:
For Economic Development, investments are necessary. Investments are made out of savings. A Life Insurance company is a major instrument for the mobilization of savings of people, particularly from the middle and lower income groups. These savings are channeled into investments for Economic Growth. A Life Insurance Company will have large funds. These amounts are collected by
way of premiums. Every premium represents a risk that is covered by that premium. In effect, therefore, these vast amounts represent pooling of risks. The funds are collected and held in trust for the benefit of the policyholders. The management of Life Insurance Companies are required to keep this aspect in mind and make all its decisions in ways that benefit the community. This applies also to its investments. Their investments benefit the society at large. All good Life Insurance Companies have huge funds, accumulated through the payments of small amounts of premium of individuals. These funds are invested in ways that contribute substantially for the economic development of the countries in which they do business. Apart from investments, business and trade benefit through insurance. Without insurance, trade and commerce will find it difficult to face the impact of major perils like fire, earthquake, floods, etc. Financiers, like banks, would collapse if the factory, financed by it, is reduced to ashes by a terrible fire. Insurers cover also the loss to financiers, if their debtors default.
ROLE OF INSURANCE IN SOCIAL SECURITY :
When the breadwinner of a family dies, to that extent, the family¶s income dies. The economic condition of the family is affected, unless other arrangement comes into being to restore the situation. Life insurance provides such an alternate arrangement. The lower strata create a cost on the society (a) Subsidies and doles and so on, and (b) Larger growth in population.
LIFE INSURANCE AND OTHER INVESTMENTS:
Most investment options make our money work harder, but they are not substitutes to life insurance. Because only a life insurance policy gives us both, risk cover as well as returns on savings.
It also allows long-term savings to be made in a relatively painless manner because of the low and convenient installments or premiums. In these types of policies the value of your insurance depends on the performance of those funds. savings through life insurance guarantee full protection against the risk of death of the insured. The person you name as your beneficiary will receive proceeds from an insurance company. Moreover. Insurance policies are a relatively low risk investment. So. it encourages ³forced thrift´ which means the insured is made to pay his premiums and save his money which he might not do in the regular course of life. More than a tax saving instrument or an interest earning investment. Insurance policies are always an intelligent decision while investing your hard-earned money. Should we require loans. PURPOSE OF INSURANCE: Insurance is income protection investment. an insurance policy is a guarantee that your loved ones would not have any financial difficulties in case any unfortunate incident happens to you. a life Insurance Policy is an ideal tool to gain security and ensure savings. they are easily obtained against an Insurance Policy. bond or money market funds. Insurance provides tax deferred savings and capital appreciation. STRENGHTS: Insurance provides an excellent peace of mind in case unfortunate incident happens to you. WEAKNESS: .Needless to say. RISKS INVOLVED: Most insurance policies carry relatively small risk because insurance companies are usually stable and are heavily regulated by government. Amongst the most known benefits of life insurance is the saving on taxes. Insurance policies with high premium and low risk cover are similar to deposits and bonds. say for building a house. In ³CASH VALUE´ policies you are allowed to invest your policy in stock.
government securities. For instance. In other words. provides nominal income as it is less risky. etc. This eats into his savings. balanced funds. The daily Unit Price is based on the market value of the underlying assets ( equities. but ensures that the policy will continue to cover his life. Investments can be made in gilt funds. UNIT LINKED INSURANCE PLANS (ULIPs): A Unit Linked Insurance Plan (ULIP) is one in which the customer is provided with a life insurance cover and the premium paid is invested in either debt or equity products or a combination of the two. regular or variable. As in all insurance policies. The risk cover can be increased or decreased. etc) and computed from the NET ASSET VALUE (NAV) ULIPs also offer flexibility. his nominees would normally receive an amount that is the higher of the sum assured or the value of the units (investments). The policy holder can switch between schemes. money market funds. They can be viewed as a combination of Insurance and Mutual Funds. it enables the buyer to secure some protection for his family in the event of his untimely death and at the same time provides him an opportunity to earn a return on his premium paid.Cash value funds can fluctuate depending on what the financial markets are doing. balanced to debt or gilt to equity. growth funds or bonds. . The number of units. The maturity benefit is not typically a fixed amount and the maturity period can be advanced or extended. Unit-Linked Life Insurance products are those where the benefits are expressed in terms of number of units and Unit Price. The payment period too can be regular or variable. a policyholder can ask the insurance company to liquidate units in his account to meet the mortality charges if he is unable to pay any premium installment. ULIPs ( key features) : Premiums paid can be single. for instance. which the customer would get depends on the unit price when he pays his premium. the risk change (mortality rate) varies with age. In the event of insured person¶s untimely death. bonds.
salaried and also for business people. in addition to the investment component.000 has equal importance for returns.000 are not interested in investing in ULIP.The maturity benefit is the Net Asset Value (NAV) of the units. It is same even for the investors in the age group of 41-55. The costs in ULIP are higher because there is a life insurance component in it as well. Insurance companies have the discrete to decide on their investment portfolios.001 and Rs. Investing in ULIP as a purpose of liquidity investment is same for professionals. The insurance sector was opened up to the private sector in August 2000. This body is vested with the framing of regulations and registering the private sector insurance companies.30. Accordingly the Insurance Regulatory Development Authority (IRDA) was set up as a statutory body in April 2000. Investor gets an option to choose among debt. They are simple. Most of the salaried people invest in ULIP for the purpose of returns and as a tool for tax relief and benefits. Insurance Sector Reforms: The Insurance Sector in India has gone through the process of reforms during 1990s and in the current decade. .20. Objective / purpose of investing in ULIPs: Investment in ULIP by the investors is mainly for tax relief (33%) and returns (30%). and easy to understand. The reforms are based on the recommendations of different committees especially Malhotra Committee. protection for dependents and tax relief. Provides capital appreciation. Investors¶ monthly income between Rs. Lead to an efficient utilization of capital. ULIP products are exempted from tax and they provide life insurance. clear. Investors in the age group of 21-30 mainly invest for tax relief and returns. this may be because of other investment that they have already made. As a result some Indian and Foreign private companies have entered the insurance business and have been in the process of building up their empire. There are about 14 general insurance and 21 life insurance companies operating in the current private sector category. Investors¶ whose monthly income is less than Rs.10. balanced and equity funds.
Some of the private Life Insurance Comp anies in India are listed below: Life Insurance Companies Aviva Life Insurance Bajaj Allianz Life Insurance Birla Sun-Life Insurance HDFC Standard Life Insurance ING Vysya Life Insurance Max New York Life Insurance MetLife Insurance Om Kotak Mahindra Life Insurance Life Insurance Corporation Reliance Life Insurance Sahara India Life Insurance SBI Life Insurance TATA AIG Life Insurance .
and so on. he owns shares of the mutual fund. the fund grew to 73. A mutual fund raises money from investors to invest in stocks. The individual investor doesn't actually own each security but instead. by minimizing risk & maximizing returns. By choosing to diversify respective investment holdings reduces risk tremendously up to certain extent. bonds. At the end of 1995. thus by pooling money together in a mutual fund. It is a package made up of several individual investments´. Mutual funds are set up to buy many stocks. which share a common financial goal. The most basic level of diversification is to buy multiple stocks rather than just one stock. But the biggest advantage to mutual funds is diversification. At the end of its first year.500 investors with assets totaling $1.600 in assets. then international. you can diversify even more by purchasing different kinds of stocks. Basics of Mutual Funds: . Diversification: Diversification is nothing but spreading out your money across available or different types of investments. The main benefit of a mutual fund is that it provides a way for the investor to achieve diversification in his investments without having to invest a lot of money. then adding bonds. A mutual fund is a type of investment vehicle where investors pool their money in order to allow each investor participate in a portfolio of securities. and other securities. Beyond that.8 billion! Now there are over 7000 different mutual funds available for you to choose from.MUTUAL FUND: ³A Mutual Fund is an actively managed investment company that collects money from individuals and institutions. investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. the fund had 200 investors with $63. The first mutual fund was the Massachusetts Investors Trust introduced in 1924. Mutual funds are considered as one of the best available investments as compare to others they are very cost efficient and also easy to invest in.
Stocks are considered to be the most common owned investment traded on the market. Bonds are considered to be the most common lending investment traded on the market. real estate. Mutual Funds invest the money collected from the investors in securities markets. which is back over predetermined amounts of time. NET ASSET VALUE: The performance of a particular scheme of a mutual fund is denoted by Net Asset Value (NAV). often in 90 days or less.Most Mutual Funds invest in one or more of the three major financial asset classes: Stocks: Stocks represent shares of ownership in a public company. prices of money market instruments are generally more stable than prices of long-term debt securities. They typically must be repaid within one year. However money market securities pay less interest than long-term bonds. ONGC and Infosys. In simple words. banks or other financial institutions. Since market value of securities changes every day. Examples of public companies include Reliance. NAV of a scheme also varies on day-to-day basis. With such short maturity periods. There are many other types of investments other than stocks and bonds (including annuities. and in return you can receive interest on your invested amount. corporations. and precious metals). Treasury Bills and Certificate of Deposits (CDs) are two commonly used money market instruments. The NAV per unit is the market value of the securities . Bonds: Bonds are basically the money which you lend to the government or a company. Money Market Instruments : Money Market Instruments are short-term debt securities issued by governments. but the majority of mutual funds invest in stocks and/or bonds. Net Asset Value is the market value of the securities held by the scheme.
The fund manager operates within those boundaries and is important in order to achieve good results within those boundaries.200 lakhs and the mutual fund has issued 10 lakhs units of Rs. mutual funds are a way for investors to diversify their risk and still benefit from professional money management. mentioned below. the prospectus is available right on the company's website. there's no one size fits all strategy when it comes to any type of investing. When choosing a mutual fund you should first get a prospectus then. risk tolerance and return expectations etc. thus mutual funds has variety of flavors. Being a collection of many stocks. the fund manager. Mutual fund investors would be well advised to consider the fund prospectus. call the fund company. It is easier to think of mutual funds in categories. There are over hundreds of mutual funds scheme to choose from. Hence. TYPES OF MUTUAL FUND SCHEMES IN INDIA: Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position. Overview of existing schemes existed in mutual fund category: by . then the NAV per unit of the fund is Rs. In many cases.10 each to the investors. For example.20. an investor can go for picking a mutual fund might be easy. The prospectus identifies key information about the mutual fund including its operating boundaries and its costs. SELECTION OF A MUTUAL FUND: Unfortunately. if the market value of securities of a mutual fund scheme is Rs. Never rely on last year's top performers. and the current market conditions.of a scheme divided by the total number of units of the scheme on any particular date. NAV is required to be disclosed by the mutual funds on a regular basis-daily or weekly depending on the type of the scheme. You need to take into consideration what your needs are and what your future financial goals are.
which combines the features of open -ended and close-ended schemes. In order to provide an exit route to the investors. The Equity Funds are sub-classified depending upon their investment objective.Open . The fund is open for subscription only during a specified period. Overview of existing schemes existed in mutual fund category: by nature 1.Ended Schemes: An open-end fund is one that is available for subscription all through the year. 3.Ended Schemes: A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The key feature of open-end schemes is liquidity. Interval Schemes: Interval Schemes are that scheme. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed. some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices. Investors can conveniently buy and sell units at Net Asse Value ("NAV") related prices. 2. Close . as follows: Diversified Equity Funds . The structure of the fund may vary different for different schemes and the fund manager¶s outlook on different stocks. These do not have a fixed maturity. The units may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV related prices. Equity Funds: These funds invest a maximum part of their corpus into equities holdings.structure 1. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor.
thus Equity funds rank high on the risk-return matrix. Income Funds: Invest a major portion into various debt instruments such as bonds. corporate debentures and Government securities. Liquid Funds: Also known as Money Market Schemes. Debt funds are further classified as: Gilt Funds: Invest their corpus in securities issued by Government. By investing in debt instruments. inter-bank call money market. Government authorities. popularly known as Government of India debt papers. these funds ensure low risk and provide stable income to the investors.Mid-Cap Funds Sector Specific Funds Tax Savings Funds Equity investments are meant for a longer time horizon. These schemes invest in short-term instruments like Treasury Bills. These funds primarily invest in short term papers like Certificate of Deposits (CDs) and Commercial Papers (CPs). These Funds carry zero Default risk but are associated with Interest Rate risk. Short Term Plans (STPs): Meant for investment horizon for three to six months. Debt funds: The objective of these Funds is to invest in debt papers. CPs and CDs. banks and financial institutions are some of the major issuers of debt papers. These schemes rank low on risk-return matrix and are . These funds are meant for short-term cash management of corporate houses and are meant for an investment horizon of 1day to 3 months. Some portion of the corpus is also invested in corporate debentures. 2. private companies. these funds provides easy liquidity and preservation of capital. These schemes are safer as they invest in papers backed by Government.
considered to be the safest amongst all categories of mutual funds. Post Graduates invest in Mutual Funds because they are professionally managed and have good returns (17%). which are in line with pre-defined investment objective of the scheme. Balanced funds : As the name suggest they. Investment in Mutual Fund as a liquidity instrument is very less among investors. entry load / exit load) the scheme and its impact on overall return. with efficient management and administration. They invest in both equities and fixed income securities. Investors¶ main objective here is to get returns. The price at which you can enter/exit (i. Investors in the age group of 41-55 invest with the objective of good returns and also for tax relief. The fund house should be professional.e. 3. Graduates invest in Mutual Funds because the funds are professionally managed and have good returns (14%). An investor can choose the fund on various criteria according to his investment objective. Proper adequacies of disclosures have to seen and also make a note of any hidden charges carried by them. RISK RETURN: . are a mix of both equity and debt funds. These schemes aim to provide investors with the best of both the worlds. The corpus fund is holding in its scheme over the period of time. Objective of investing in Mutual Funds: Most of the investors¶ purpose of investing in mutual fund is because it is professionally managed (34%). A few of them are: Thorough analysis of fund performance of schemes over the last few years managed by the fund house and its consistent return in the volatile market.
A mutual fund is considered to be relatively less expensive way to make and monitor their investments. Economies of Scale : . Most funds also pass on these gains to investors in a distribution. Pros (advantages) of Investing in Mutual Funds: Professional Management : The basic advantage of funds is that. the fund has a capital gain. are subject to market risks and there is no guarantee against loss in the Scheme or that the Scheme¶s objectives will be achieved. You can then sell your mutual fund shares for a profit. Funds will also usually give you a choice either to receive a check for distributions or to reinvest the earnings and get more shares. the NAV of the Units issued under the Scheme can go up or down depending on various factors and forces affecting capital markets. If fund holdings increase in price but are not sold by the fund manager. Investors purchase funds because they do not have the time or the expertise to manage their own portfolio. Diversification : Purchasing units in a mutual fund instead of buying individual stocks or bonds.Mutual funds. the investors risk is spread out and minimized up to certain extent. TYPES OF RETURNS: There are three ways. the fund's shares increase in price. where the total returns provided by mutual funds can be enjoyed by investors: Income is earned from dividends on stocks and interest on bonds. The idea behind diversification is to invest in a large number of assets so that a loss in any particular investment is minimized by gains in others. they are professional managed. As with any investment in securities. A fund pays out nearly all income it receives over the year to fund owners in the form of a distribution If the fund sells securities that have increased in price. like securities investments. by well qualified professional.
The mutual fund industries are thus charging extra cost under layers of jargon. and help to bring down the average cost of the unit for their investors. Dilution : Because funds have small holdings across different companies. at the time of purchase. Cons (disadvantages) of Investing in Mutual Funds: Professional Management : Some funds doesn¶t perform in neither the market. high returns from a few investments often don't make much difference on the overall return. a capital-gain tax is triggered. Dilution is also the result of a successful fund getting too big. the manager often has trouble finding a good investment for all the new money. When money pours into funds that have had strong success. thus help to reducing transaction costs. compare to other available instruments in the market. Liquidity : Just like an individual stock. Taxes : When making decisions about your money. For example. fund managers don't consider your personal tax situation. thus many investors debate over whether or not the so-called professionals are any better than mutual fund or investor himself. as their management is not dynamic enough to explore the available opportunity in the market. Costs : The biggest source of AMC income is generally from the entry & exit load which they charge from investors. for picking up stocks. which affects how profitable the individual is from . mutual fund also allows investors to liquidate their holdings as and when they want. Simplicity : Investment in mutual fund is considered to be easy. when a fund manager sells a security. and the minimum investment is small.Mutual fund buy and sell large amounts of securities at a time.
Its objective is to increase public awareness of the mutual fund industry.the sale. registered with SEBI. It notified regulations in 1993 (fully revised in 1996) and issues guidelines from time to time. Regulating Authorities of Mutual Funds: To protect the interest of the investors. The Association of Mutual Funds in India (AMFI) reassures the investors in units of mutual funds that the mutual funds function within the strict regulatory framework. transparency etc. Securities and Exchange Board of India (SEBI) formulates policies and regulates the mutual funds. It might have been more advantageous for the individual to defer the capital gains liability. AMFI also is engaged in upgrading professional standards and in promoting best industry practices in diverse areas such as valuation. SEBI approved Asset Management Company (AMC) manages the funds by making investments in various types of securities. disclosure. According to SEBI Regulations. Custodian. . holds the securities of various schemes of the fund in its custody. two thirds of the directors of Trustee Company or board of trustees must be independent. MF either promoted by public or by private sector entities including one promoted by foreign entities is governed by these Regulations.
Since then the insurance industry has gone through many sea changes. The entry of the private players and the increased use of the new distribution are in the limelight today. You cannot take anything for granted in life. Nearly 80% of Indian populations are without Life Insurance cover and the Health Insurance. The competition LIC started facing from these companies were threatening to the existence of LIC.INDUSTRY PROFILE INTRODUCTION: The Insurance sector in India governed by Insurance Act. it adds about 7% to the country¶s GDP. 1956 and General Insurance Business (Nationalization) Act. In spite of all this growth the statistics of the penetration of the insurance in the country is very poor. Life is a roller coaster ride and is full of twists and turns. Today it stands as a business growing at the rate of 15 . Together with banking services.20% annually. Since the liberalization of the industry the insurance industry has never looked back and today stand as the one of the most competitive and exploring industry in India. 1972 Insurance Regulatory and Development Authority (IRDA) Act. Insurance policies are a safeguard against the . It was due to this immense growth that the regulations were introduced in the insurance sector and in continuation ³Malhotra Committee´ was constituted by the Government in 1993 to examine the various aspects of the industry. The key element of the reform process was participation of overseas insurance companies with 26% capital. With such a large population and the untapped market area of this population insurance happens to be a very big opportunity in India. Creating a more efficient and competitive financial system suitable for the requirements of the economy was the main idea behind this reform. 1999 and other related acts. The Life Insurance Corporation Act. The use of new distribution techniques and the IT tools has increased the scope of the industry in the longer run. This is an indicator that growth potential for the insurance sector is immense in India. 1938.
jewelry et al. natural disaster. Insurance . As you can not fight against these man-made and natural calamities. the insurer agrees to pay the insurer for financial losses arising out of any unforeseen events or risk in return for a regular payment of premium.Kind of Investment: Insurance is an attractive option for investment but most people are not aware of its advantages as an investment option. the person seeking the cover. you buy peace of mind. What Is Insurance? Insurance is a contract between two parties.uncertainties of life. insurance . automobiles. which means to financially compensate for losses that occur uncertainly through accident. By buying life insurance. Insurance is system by which the losses suffered by a few are spread over many. these insurance plans are also called as a Risk Cover Plans. such as. and the insured. illness. theft. home. Thus. so at least be prepared for them and their aftermath by taking insurance policies. insurance is about risk cover and protection. Types of Insurance Insurance policies cover the risk of life as well as other assets and valuables. Within this contract. Insurance also serves as an excellent tax saving mechanism. Insurance policy helps in not only mitigating risks but also provides a financial cushion against adverse financial burdens suffered. the insurer or the insurance company. Remember that first and foremost. Insurance is a protection against financial loss arising on the happening of an unexpected event. On the basis of the risk they cover. exposed to similar risks. The Government of India has offered tax incentives to life insurance products in order to facilitate the flow of funds into productive assets.
and resolution of insurance claim. suspension or cancellation of such registrations. all appointed by Government of India. earthquake. withdrawal. This organization came into being in 1999 after the bill of IRDA was passed in the Indian parliament. Powers and Functions of IRDA It issues the applicants in insurance arena. . five full time members and four part-time members. Insurance Regulatory & Development Authority : Insurance Regulatory & Development Authority is regulatory and development authority under Government of India in order to protect the interests of the policyholders and to regulate. Life Insurance covers the risk involved in a person's life. submission value of policy and other terms and proposals in the contract. As the term suggests. while General Insurance provides financial protection against unforeseen events. nomination by policy holders. etc.policies can be classified into two categories: Life Insurance and General Insurance. insurable interest. flood. disease. modification. It is basically a ten members' team comprising of a Chairman. a certificate of registration as well as renewal. It protects the interests of the policy holders in any insurance company in the matters related to the assignment of policy. like accident. promote and ensure orderly growth of the insurance industry.
It is also concerned with the regulation of the rates. provisions and conditions that may be offered by insurers in respect of general insurance business if it is not controlled or regulated by the Tariff Advisory Committee. it also defines the code of conduct for the surveyors and loss assessors involved with the insurance business. It is also entitled to supervise the functioning of the Tariff Advisory Committee. Apart from this. Apart from this. It is also empowered to be involved in the arbitration of disagreements between insurers and intermediaries or insurance intermediaries. profits. One of the major functions of IRDA includes endorsing competence in the insurance business. mediators. code of conduct and practical instructions for mediator as well as the insurance company. . insurance intermediaries and other organizations related to the insurance sector. undertaking inspection and investigating the audit of the insurers. IRDA specifies the terms and pattern in which books of accounts are to be maintained and statement of accounts shall be provided by insurers and other insurance mediators.It also specifies obligatory credentials. IRDA is also entitled to for asking information. It also regulates investment of funds by insurance companies as well as the maintenance of margin of solvency. It is meant to specify the proportion of premium income of the insurer to finance policies. upholding and regulating professional organizations in insurance and re-insurance business is also a major duty of IRDA.
Table 1: Milestone¶s in the Life Insurance Business in India: Year 1912 Milestone¶s in Life Insurance Business in India The Indian Life Insurance Companies Act enacted as the first statue to regulate the Life Insurance Business 1928 The Indian Life Insurance Companies Act enacted to enable the government to collect statistical information about both Life and . The business of Life Insurance in India in its existing form started in India in the year 1818 with the establishment of the oriental Life Insurance Company in Calcutta.degree turn witnessed over a period of almost 190 years. Tracing the developments in the Indian insurance sector reveals the 360. however in last decade 23 new players have emerged in the filed of insurance. Impact of IRDA on Indian Insurance Sector: The creation of IRDA has brought revolutionary changes in the Insurance sector. only players in the insurance industry were Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). When IRDA came into being. In last 10 years of its establishment the insurance sector has seen tremendous growth. HISTORY OF INSURANCE SECTOR: The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. Some of the important milestones in the Life Insurance Business in India are given in the table 1. The IRDA also successfully deals with any discrepancy in the insurance sector.IRDA also specifies the share of life insurance business and general insurance business to be accepted by the insurer in the rural or social sector. The business of life insurance in India its existing form started in India in the year 1818 with the establishment of the oriental Life Insurance Company in Calcutta.
1968 The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. 1938 Earlier legislation consolidated and amended by the Insurance Act with the objective of protecting the interest of the insuring public. frames a code of conduct for ensuring fair conduct and sound business practices. The oriental Insurance Company Ltd. 1972 The General Insurance Business (Nationalization) Act. 107 insures amalgamated and grouped into four companies viz. . Table 2: Milestone¶s in the general insurance business in India Year 1907 Milestone¶s in the general insurance business in India The Indian Mercantile Insurance Ltd. The General Insurance Business in India. LIC Act. viz. 1956 245 Indian and foreign insures and provident societies taken over by the central government and Nationalized. the National Insurance Company Ltd. can trace its roots to the Triton Insurance Company Ltd. The New India Assurance Company Ltd. 1972 nationalized the general insurance business in India which effect from 1st January 1973. 1956 with a capital contribution of Rs. The first general insurance company established in the year 1850 in Calcutta by the British. 1957 General Insurance Council. Some of the important Milestone¶s in the general insurance business in India are given in the table 2.Non-life insurance business. 5 crore from the government of India. LIC formed by an act of parliament. set up the first company to transact all classes of general insurance business. a wing of the Insurance Association of India. on the other hand.
The General Insurance 3 Business was nationalized after the promulgation of General Insurance Business (Nationalization) Act. The first General insurance company to be set up by an Indian was Indian Mercantile insurance company limited which was established in 1907. 2.And the United India Insurance Company Ltd. Towards the end of 2000. 3. History of insurance in India: Insurance has a long history in India. The Life Insurance Corporation (LIC) was established on 1-09-1956 and had been the sole corporation to write the life insurance business in India. United India Insurance Company Limited. The Indian insurance industry saw a new sun when the Insurance Regulatory and Development Authority (IRDA) invited the applications for registration as insures in August 2000. whose share were mainly held by the British. There emerged many a player on the Indian scene thereafter. the industry has presented promising prospects for the coming future. Life Insurance in its current form was introduced in 1818 when Oriental Life Insurance Company began its operation in India. New India Assurance Company limited. National Insurance Company Limited. With the liberalization and opening up the sector to private players. the relation ceased to exist and the four companies are at present. Oriental Insurance Company Limited. The transition . operating as independent companies. 4. 1972. GIC incorporated as a company. Triton insurance company limited was the first General Insurance company to have established in India in 1850. The General Insurance Corporation of India and its 4 subsidiaries undertook the post-nationalization general insurance business: 1.
Most of the private insurance companies have formed joint venture partnering well recognized foreign players across the globe. There are now 29 insurance companies operating in the Indian market 14 private insurers. which would help JV partners to bring in funds for expansion. the insurance industry in India today stands at a crossroads as competition intensifies and companies prepare survival strategies in a detariffed scenario. product innovation and enhancement will increase. The life insurance industry registered 51 percent growth in 2003-2004. nine private non life insurers and six public sector companies.42 percent of the world¶s life and non. There are opportunities in the pensions sector where regulations are being framed. the private players are active in the liberalized environment. The health insurance sector has tremendous growth potential. and as it matures and new it matures and new players enter.life business in 1997. The IRDA has issued the first license for a standalone health company in the country as many more players wait to enter. With many more joint venture in the offing. There is pressure from both within the country and outside on the Government to increase the Foreign Direct Investment (FDI) limit from the current 26% to 49%. The insurance market have witnessed dynamic charges which includes presence of a fairly large number of insures both life and non-life segment. . The depending of the health database over time will also allow players to develop and price products for larger segment of society. The Indian life and non-life insurance business accounted for merely 0. Insurance Market-Present: The insurance sector was opened up for private participations four years ago. For years now. significantly adding to the now globally visible glow of our economy. Less than 10% of Indians above the age of receive pensions.has also resulted into introduction of ample opportunities for the professional including chartered Accountants.
The industry now deals with customers who knows what they want and when. oriental Insurance and United India Insurance ± had a combined market share of 73.47% as of October 2005.sector non-life insures ± New India Assurance. ICICI Lombard has focused on growing the market for general insurance products and increasing penetration within existing customers through product innovation and distribution. Reaching out to customers: No doubt. Also as the private sector control over 26. had a share of 74.26% market share in terms of fresh premium. there will be considerable improvement in customer service level. the four public.53% of the non . Similarly.11% market share.18% of the life insurance market and over 26. The country¶s largest life insurer. But the reality is that the intense competition in the last five years has made it difficult for new entrants to keep pace with the leaders and there by failing to make any impact in the market.life market. the public sector companies still call the shots. whereas ICICI Lombard General Insurance Company is the leader among the private non-life players with an 8.State Insurers Continue To Dominate: There may be room for many more players in a charge under insured market like India with a population of over one billion. Life Insurance Corporation of India (LIC). ICICI Prudential Life Insurance Company continues to lead the private sector with a 7.82% in the new business premium income in November 2005. corporate agent and bank assurance. and are more demanding in terms of better service and speedier responses With the industry all set to move to a detariffed regime by 2007. the customer profile in the insurance industry is changing with the introduction of large number of divergent intermediaries such as broker. National Insurance. product innovation and newer standards of under writing Intense competition: .
insurers have successfully managed to tide over the crisis without any adverse impact on their balance sheets. Insurance company will vie with each other to capture market share through batter pricing and client segmentation. innovative sales and credit worthiness. The opportunity in the Indian market place is immense. The year 2005 was a testing phase for the general insurance industry with a series of catastrophes hitting the Indian sub-continent. competition will manifest itself in prices. However. Global standards: While the world is eyeing India for growth and expansion. Indian company are becoming increasingly world class.In a de-tariffed environment. and Nepal and will soon start operation in Saudi Arabia. the UK.5% of GDP and general insurance premiums being 0. with robust reinsurance programme in place. With life insurance premiums are being just 2. Sri Lanka. increase competition will drive insurers to rural and semi-urban markets. The company now operates in Mauritius. It also plans to venture into the African and Asia-Pacific regions in 2006. which has set its site on becoming a major global player following a 280±crore investment from the Indian government. The battle has so far been fought in the big urban cities. The next 5 year will be challenging but those that can build scale and market share will.65% of GDP. Take the case of LIC. but in the next few years. Fiji. products. underwriting criteria. COMPANY PROFILE .
In October 1998. together with a low charging structure. Ltd. the Company's new business premium income stood at Rs.INTRODUCTION: Established on 14th August 2000. 2008.839.811 lives so far. and a Group Company of the Standard Life Plc. As of 31 December. The partnership : HDFC Standard Life first came together for a possible joint venture. Despite this both companies remained firmly committed to the venture. Around this time Standard Life purchased 2% of Infrastructure Development Finance Company Ltd. The Company is one of leading private insurance companies. further strengthening the relationship. HDFC Standard Life Insurance Co. In October 1995 the companies signed a 3 years joint venture agreement. HDFC Standard Life Insurance offers a range of individual and group solutions. Around this time Standard Life purchased a 5% stake in HDFC. HDFC Standard Life has adequate financial expertise to manage long-term investments safely and resourcefully.70 Crores.India's leading housing finance institution. UK.due to changes in government and ongoing delays in getting the IRDA (Insurance Regulatory and Development authority) Act passed in parliament. Standard Life also started to use the . (IDFC). the joint venture agreement was renewed and additional resource made available. Its group solutions have been planned to offer complete flexibility. Being a joint venture of top financial services groups. 1. enter the Life Insurance market. which can be easily personalized to specific needs. is a joint venture between Housing Development Finance Corporation Limited (HDFC Limited) . it has covered over 812. The next three years were filled with uncertainty . It was clear from the outset that both companies shared similar value and beliefs and a strong relationship quickly formed. in January 1995. offering a range of individual and group insurance solutions. in India.
. Vision. Vision: 'The most successful and admired life insurance company. in January 2000 an expert team from the UK joined a hand picked team from HDFC to form the core project team. rather it is a combination of several things like ± Customer service of the highest order Value for money for customer professionalism in carrying out business. Therefore. based in Mumbai. This does not just mean being the largest or the most productive company in the market. 'The most obvious choice for all'. Innovative products to cater to different need of different customers.service of the HDFC Treasury department to advise them upon their investments in India. In a further development Standard Life agreed to participate in the Asset Management company promoted by HDFC to enter the mutual fund market. Use of technology to improve service standards Increasing market share. the opening of the market looked very promising and both companies agreed the time was right to move the operation to the next level. Mission & Values of HDFC Standard Life Insurance Ltd. and set the standards in the industry'. The Mutual Fund was launched on 20th July 2000. Mission: To be the top new life insurance company in the market. offer the best value for money. Towards the end of 1999. the easiest to deal with. which means that we are the most trusted company. Around this time Standard Life purchased a further 5% stake in HDFC and a 5% stake in HDFC Bank.
TRUST: We appreciate the trust placed by our policy holders in us. Creativity and Innovation.Their mission is to be the best new life insurance company in India and these are the values that will guide the country. Hence. We will be do this by offering life insurance and pension products. Competitiveness. we will be offering a range of innovative products to meet these needs. Achieve impeccable reputation and credentials through best business practices. INNOVATION: Recognizing the different needs of our customer. Corporate Governance. we will aim to manage their investments very carefully and live up to this trust. Values that we observe while we work: Integrity Innovation Customer centric People Care ³One for all and all for one´ Team work Joy and Simplicity Goals of the Company: Emerge as transactional Life Insurer of global scale and standard. Values: SECURITY: Providing long term financial security to our policy holders will be our constant Endeavour. . Guiding Principles : Customer Care and Satisfaction.
COMPETITORS: Life Insurance Companies Aviva Life Insurance Bajaj Allianz Life Insurance Birla Sun-Life Insurance HDFC Standard Life Insurance ING Vysya Life Insurance Life Insurance Corporation Max New York Life Insurance MetLife Insurance Om Kotak Mahindra Life Insurance Reliance Life Insurance Sahara India Life Insurance SBI Life Insurance TATA AIG Life Insurance ORGANISATION STRUCTURE .
B.O.E.D C.O Chief Finance Officer Zonal Finance Manager Senior Branch Supervisor National Sales Manager Zonal Manager Chief Administration Officer Zonal Administration Officer Branch Manager Senior Branch Supervisor Asst. Manager Sales Team Manager Insurance consultants Finance Executive POLICIES AND PRODUCTS: . Branch Supervisor Administrative Executive Finance Officer Business Dept.
Given below is a comprehensive list of policies and products on offer by HDFC Standard Life Insurance: Protection Plans: HDFC Term Assurance Plan HDFC Loan Cover Term Assurance Plan HDFC Home Loan Protection Plan Children's Plans: HDFC Children's Plan HDFC Unit Linked Young Star II HDFC Unit Linked Young Star Plus II HDFC Unit Linked YoungStar Champion Retirement Plans: HDFC Personal Pension Plan HDFC Unit Linked Pension II HDFC Unit Linked Pension Maximiser II HDFC Immediate Annuity Savings & Investment Plans: HDFC Unit Linked Endowment Plus II HDFC SimpliLife HDFC Unit Linked Endowment II HDFC Unit Linked Enhanced Life Protection II HDFC Unit Linked Wealth Maximiser Plus HDFC Unit Linked Endowment Winner HDFC Endowment Assurance Plan HDFC Money Back Plan HDFC Single Premium Whole of Life Insurance Plan HDFC Assurance Plan .
We continue to promote high integrity in business practices and shun short cuts and unethical practices. 2000. financially secure business supported by two strong and secure promoters ± HDFC Ltd and Standard Life. Being the first private player to be registered with the IRDA and the first to issue a policy on December 12. as we wish to be perceived as an institution with high moral standing.Leave Encashment HDFC Standard Life believes that establishing a strong and ethical foundation is an essential prerequisite for long-term sustainable growth. we have consistently focused on setting benchmarks in all aspect on insurance business. our differentiators are: Strong Promoter: HDFC Standard Life is a strong. HDFC Ltd¶s excellent brand . we have concentrated our focus on expansion of branch network. Our core values are drilled down to all levels of employees. organising an efficient and well trained sales force. Since our inception in 2000. as these are inviolable.Superannuation Group Unit Linked Plan . To ensure this.Gratuity Group Unit Linked Plan . when the Indian insurance space was opened for private participation. and setting up appropriate systems and processes with optimum use of technology.HDFC Savings Assurance Plan Health Plans: HDFC Critical Care Plan HDFC SurgiCare Plan Group Plans: Group Term Insurance Plan Group Variable Term Insurance Plan Group Unit Linked Plan . As all these areas form the basic infrastructure for establishing the highest possible customer service standards.
. The investment policies and actions are regularly monitored by a formal Investment Committee comprising non-executive directors and the Principal Officer & Executive Director. we are one of the few brands that customers recognize. Preferred and Trusted Brand: Our brand has managed to set a new standard in the Indian life insurance communication space. Today. is the most recalled campaign in its category. Our eight-step structured sales process µDisha¶ however. like and prefer to do business. consistent. Standard Life is a strong. As a life insurance company. with specific objectives in mind. We were the first private life insurer to break the ice using the idea of self-respect instead of µdeath¶ to convey our brand proposition (Sar Utha Ke Jiyo). Thus.strength emerges from its unrelenting focus on corporate governance. financially secure business and a market leader in the UK Life & Pensions sector. and stable investment returns to match the investor¶s long-term objective and return expectations. helps customers understand their latent needs at the first instance itself without focusing on product features or tax benefits. our investment focus is based on the primary objective of protecting and generating good. we understand that customers have invested their savings with us for the long term. sales in the industry have been characterized by over reliance on tax benefits and limited advice-based selling. irrespective of the market condition. Need Based Selling Approach: Despite the criticality of life insurance. Moreover. high standards of ethics and clarity of vision. Sar Utha Ke Jiyo. our brand thought. Investment Philosophy: We follow a conservative investment management philosophy to ensure that our customer¶s money is looked after well.
but to create maximisation of stakeholder's value. Today.Need-based selling process. we are extremely satisfied with the base that we have created for the long-term success of this company. Focus on Long term Value HDFC Standard Life do not focus in the business of ramping up the topline only. pricing. Almost all employees have undergone training to enhance their technical skills or the softer behavioural skills to be able to deliver the service standards that our company has set for itself. we have developed and implemented various training modules covering various aspects including product knowledge. Besides the mandatory training that Financial Consultants have to undergo prior to being licensed. looks at the whole financial picture. These are regularly reported to the board and this ensures that the company management and board members are fully aware of any risks and the actions taken to ensure they are mitigated Focus on Training Training is an integral part of our business strategy. be it: Protection: Need for a sound income protection in case of your unfortunate demise . Diversified Product Portfolio HDFC Standard Life¶s wide and diversified product portfolio help individuals meet their various needs. the first of its kinds in the industry. selling skills. Transperent Dealing We are one of the few companies whose product details. objection handling skills and so on. Customers see a plan not piecemeal product selling. 'Disha'. clauses are clearly communicated to help customers take the right decision. Risk Control Framework HDFC Standard Life has fully implemented a risk control framework to ensure that all types of risks (not just financial) are identified and measured.
Risk and Return: Low Balanced Funds: Combining equity investment with fixed interest in the instrument. Bank deposits and money market instruments. Govt. Some of the charges are: . Fixed Interest and Bond Funds : Invested in corporate bonds. Risk and Return: Medium CHARGES COMPANY: OF HDFC STANDARD LIFE INSURANCE HDFC Standard Life Insurance follows the method of cancelling the units in order to recover the charges. securities and other fixed income instrument Risk and Return: Medium Cash Funds : Some times known as money market funds invested in cash. Risk and Return: Medium Income.Investment: Need to ensure long-term real growth of your money Savings: Save for the milestones and protect your savings too Pension: Need to save for a comfortable life post retirement Health: Cover for health related exigencies NATURE OF INVESTMENT / RISK AND RETURN CATEGORY: Equity funds: Primary invested in company stock with a general aim of capital appreciation.
The table given below will help show how percentage of premium will help to buy units. the reminders is invested to buy units.000 to 9.99.99.CHARGES: PREMIUM ALLOCATION CHARGE: This is a premium based charge.99.000 to 4. The allocation rates are guaranteed for the entire duration of the policy term. This % is called the allocation rate. Premium paid during years Allocation rate 1st & 2nd Year 3 rd Year onwards Regular premiums Up to 1.00.000 to 19.00.999 90% From 20.999 85% From 10.000 to above 95% 99% 99% 99% Single premium top ups 97.00. after deducting this charge from your premiums.999 80% 99% From 500.99.5% 99% .999 Onwards 70% 99% From 2.
We take the charge by cancelling units benefit charges proportionately from each of the funds you have chosen. Charges Policy administration charge Explanation A charge of Rs. Surrender charge: This is the charge we will apply when the policy is surrendered. 20 per month is charged to cover regular administration costs. Switching charge 24 switches will be given free in a policy year and any additional switch will be charged at Rs. . 100 per switch.Fund management charge (FMC): In the long term the key to build great maturity values is a low FMC. 250 per request. It is equal to 30% of the difference between the regular premiums expected and received in the first two years of the contract. The amount of the charge taken each month depends on your age. Mortality and other risk Every month we make a charge for providing you with the death or critical illness cover in your policy. Other charges: The following is the set of other charges that we will take from your policy. We take the charge by cancelling units proportionately from each of the funds you have chosen. Partial withdrawal Charge 6 partial withdrawal requests will be free in a policy year and any additional partial withdrawal requests will be charged at Rs. The daily unit price already increase our low fund management charge of only o.8% per annum of the funds value.
The mortality charge rates and accidental death benefit charge rate are guaranteed for full duration of your policy term and critical illness charge rates can be reviewed at the end of every 3 years from date of launch of this product. 6 policy servicing requests will be free in a policy year and any additional policy Servicing requests will be charged at Rs. The fund management charge cannot exceed 2% per annum. Miscellaneous charge This is a charge levied for any alterations within contract like premium redirection or adhoc policy servicing. Service tax and education is payable at the applicable rates on the mortality and other risk benefit charges. 250 is for revival to cover for administration expenses. And can be increased subject to a maximum increase 200% of every rate.250 per request. The policy administration charge can increase in line with inflation subject to a maximum of 5% per annum over the period since inception. 100 per switch increased in line with inflation subject to a maximum of 5% per annum over period since inception. 12 premium redirection requests will be free in a policy year any premium redirection requests will be charge at 250 per request. The surrender charge can be increased subject to a maximum of 10% of the fund applicable for the first 3 years.Revival charge A charge of Rs. The maximum switching charge allowed is Rs. Alteration charges: Current charges cannot be charged without prior approval from IRDA. .
82. investment. pension. 250 per request for premium redirection. Recognition for the service to the sector has come from several national and international entities including the World Bank that has lauded HDFC as a model housing finance company for the developing countries.000 crores including the mortgage loan assets of more than Rs. and is rated by Standard & Poor's as 'strong' with a rating of A+ and as 'good' with a rating of A1 by Moody's.800 crores. HDFC has set benchmarks for the Indian housing finance industry. It currently has a customer base of around 7 million people who rely on the company for their insurance. earning the trust of more than 9. 17. Qatar. and Bangladesh in the setting up of housing finance companies. partial withdrawal and other adhoc policy servicing requests.000 depositors.551 crores. It is a leading pensions provider in the UK. Kuwait and Oman to assist NRI¶s and PIO¶s to own a home back in India. Standard Life Group (Standard Life plc and its subsidiaries) The Standard Life Group has been looking after the financial needs of customers for over 180 years. 95.00.We can charge up to Rs. We can increase this amount in line with inflation subject to a maximum of 5% per annum over the period since inception.3 million families own a home. London and Singapore with service associates in Saudi Arabia. India¶s premier housing finance institution has assisted more than 3. Customer Service and satisfaction has been the mainstay of the organization. It has international offices in Dubai. since its inception in 1977 across 2400 cities and towns through its network of over 250 offices. As of December 2008. The corporation has a deposit base of Rs. Standard Life was . Parentage HDFC Limited HDFC Limited. Maldives. banking and health-care needs. the total asset size has crossed more than Rs. HDFC has undertaken a lot of consultancies abroad assisting different countries including Egypt. Its investment manager currently administers £125 billion in assets.
its pathbreaking implementation of an enterprise-wide workflow system. Deepak M Satwalekar Awarded QIMPRO Gold Standard Award. training. HDFCSL expanded its reach in the Bancassurance channel by arrangements with cooperative banks in the rural areas. The advertisements of the company were ranked 6th amongst µThe 10 most effective Advertisements¶ in September 2007. licensing. The '5 Star' accolade has also been awarded to Standard Life Investments for the last 10 years.awarded the 'Best Pension Provider' in 2004. providing centralized control over a vast geographical spread for key business units such as inventory. and to Standard Life Bank since its inception in 1998. Standard Life Bank was awarded the 'Best Flexible Mortgage Lender' at the Mortgage Magazine Awards in 2006. etc. In addition the . Received the PCQuest Best IT Implementation Award 2007 for Wonders. This was complemented by use of technology that enabled capture of all interactions with customers across all touch points Sar Utha Ke Jiyo was honoured as µAmong India¶s 60 Glorious Advertising Moments. by putting in place a robust mechanism to capture µVoice of the Customer¶ through service audits across its offices. Mr. and it was voted a 5 star life and pension¶s provider at the Financial Adviser Service Awards for the last 10 years running. Received the 2008 CIO Bold 100 Award for its mobile workforce portal and the Special 2008 CIO Security Award for a secure computing environment. HDFCSL Milestone Received the PCQuest Best IT Implementation Award 2008 for Consultant Corner. the applications for its financial consultants. 2005 and 2006 at the Money Marketing Awards. including identity management respectively. Continued to increase its focus on quality service.
The 3 awards are the highest won by any single brand in the financial services business (including banking. Pension Plan Tops Mint¶s Survey of Best TV Ads. . mutual fund. the leading business publication of India.company also bagged the EMC storage award for being the most innovative users of storage and storage management. Ranked 29th most trusted Indian Brands amongst the Top 50 Service Brands of 2006 according to a study conducted by the Brand Equity ± Economic Times. HDFC Standard Life¶s advertising created high awareness for the brand and bagged 2 silver and 1 bronze awards at the ADFEST 2007 National Awards organised by the Advertising Agencies Association of India (AAAI). insurance and other financial services).
RESEARCH DESIGN INTRODUCTION: A Research Design is a logical and systematic plan prepared for directing a research study. It provides a systematic plan of procedure for the researcher to follow. It constitutes the blueprint for the collection. the methodology and the techniques to be adopted for achieving the objectives. It specifies the objectives of the study. structure. SCOPE OF THE STUDY: The study basically tries to identify the various investment break-ups for the different µUnit Linked Insurance Plans¶ of the company. STATEMENT OF THE PROBLEM: To ascertain the performance of the different µUnit Linked Insurance Plans¶ of the company based on the various NAV (Net Asset Value) schemes and also to find out the factors which exert a strong influence on the changes in NAV. A research design is the program that guides the investigator in the process of collecting. It is indispensable for a research project. TITLE OF THE STUDY: ³Comparative analysis of various NAV (Net Asset Value) schemes of HDFC STANDARD LIFE for the past three (3) years and the factors influencing the changes in NAV´. It will clearly show the . and strategy of investigation conceived so as to obtain answers to research questions¶. analyzing and interpreting observation. measurement and analysis of data. It is ³the plan.
shares) which range from potentially high-risk-high-return to potentially low-risk-low-return to match the investors¶ risk taking ability. equities (i. offer suggestions to the investors for directing their investment which would fetch them with maximum yield. which offer investments of different types such as Fixed Income (eg. OPERATIONAL DEFINITIONS: INSURANCE: ³It is a contract providing for payment of a sum of money to the person assured or.e. To generate an analysis of the various NAV schemes of the company with respect to the available plans. . To examine the different factors which exert a strong influence on the changes in NAV. Government securities. to the person entitled to receive the same. The study will also help an investor to direct his investments in the company¶s unit linked funds. Company debentures. failing him. To analyze the investment break-ups in the various schemes of the company. It will also develop a comparative analysis of the various NAV schemes and hence. OBJECTIVES OF THE STUDY: To portray the exact principles and role of insurance in the current scenario. The study will reflect the portfolio break-up of the different funds of the company. etc.different investment funds available with the company for the investors to make an investment on the same.) and. on the happening of a certain event´. To study the different life insurance plans of the company.
(b) Secondary Sources. and other securities. PRIMARY SOURCES: Primary Sources are original sources from which the researcher directly collects data that have not been previously collected. A mutual fund raises money from investors to invest in stocks. According to the Securities Exchange Board of India (SEBI). It is the fund¶s assets minus its liabilities divided by the number of outstanding shares. Primary data are first-hand information collected through various methods such as observation.MUTUAL FUND: ³A Mutual Fund is an actively managed investment company that collects money from individuals and institutions. etc. calculated at the end of each business day´. which share a common financial goal. bonds. SOURCES: The sources of data may be classified into: (a) Primary Sources. NET ASSETS OF SCHEME NAV = NUMBER OF OUTSTANDING UNITS The performance of a particular scheme of a mutual fund is d etermined by its net asset value. NET ASSET VALUE (NAV) : ³The NAV is simply a measure of the current dollar value of one share of a mutual fund. interviewing. It is a package made up of several individual investments´. .
Here. Here.. Here. Internal circulatory documents of the company. analysis is being done on the different unit linked insurance plans of the company by studying its various NAV schemes. METHODOLOGY: µMethodology refers to a set of methods and principles used to perform a particular activity¶. Primary and Secondary data gathering methods are used for the purpose of the research. These data are not collected directly as in case of primary sources. Website of the company. 2007& 2008) on a quarterly basis and hence. SECONDARY SOURCES: These are sources containing data which have been collected and compiled for another purpose.2006. study the factors which exert a strong influence on the changes in NAV. The secondary sources consists of readily available compendia and already compiled statistical statements and reports whose data may be used by researchers for their studies.e. TOOLS FOR DATA: . Different books on mutual funds and insurance.. the secondary data is obtained from: Brochures. the main aim of the research is to analyze the NAV schemes of the company for the past three years (i.e. i. the primary data is collected as follows: (a) Interview with the Sales Manager. Here. (b) Discussions with other personnel such as advisors and trainers. an analytical study is done.
components. purpose. life insurance and other investments. types of Mutual Fund schemes. origin. risk return. Unit Linked Insurance Plans: meaning. Mutual Funds: meaning. listing of private Life Insurance Companies in India. need. key features. principles. LIMITATIONS OF THE STUDY: Findings of the study are only confined to HDFC STANDARD Life Insurance Company Ltd. meaning of Net Asset Value or NAV. tables and graphs like Bar Diagrams and Pie Charts. role in economic development & social security. The analysis and interpretation part of the study is based only on the internal reports of the Company. INDUSTRY PROFILE . regulating authorities of Mutual Funds. diversification. The study is limited to the extent of available data only. risks involved. history. 2. strengths & weaknesses. objective of investing in ULIPs.The analysis is done with the help of statistical tools. pros & cons of investing in Mutual Funds. Insurance sector reforms. CHAPTER SCHEME: 1. INTRODUCTION Life Insurance: meaning. selection of a Mutual Fund.
FINDINGS This chapter consists of the summary of findings. RESEARCH DESIGN Introduction. Title of the study. Sources of data. ANALYSIS & INTERPRETATION The data collected for the past three (3) years has been tabulated on a quarterly basis and an analysis has been drawn based on the various Net Asset Values of the different Investment Funds with respect to the available Units Linked Insurance Plans of the company. Methodology. Statement of the problem. Objectives of the study. 5. Operational definitions of Insurance. COMPANY PROFILE 4.3. BIBLIOGRAPHY 10. 7. Also. Mutual Fund & Net Asset Value or NAV. 8. ANNEXURE . 6. Limitations of the Study. SUGGESTIONS This chapter consists of the suggestions that have been made for the improvement of overall performance of the company. CONCLUSION This chapter of the study where a conclusion has been drawn based on the findings of this report. 9. Scope of the study. Tools for data. a brief description of the factors influencing the changes in NAV is given at the end of this part.
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