Professional Documents
Culture Documents
FOR
BY
Project Guide
“Prof Vaishampayam”
AY 2007-08
PREFACE
As an essential and obligatory part of my course, I have undergone two months summer
training at Tata AIG Life Insurance Company Ltd, Pune. This training has helped me in getting
the practical knowledge into the business environment.
I got the knowledge about the Insurance industry. In this report I have said about the current
position of the insurance sector in India.
This report includes a deep study made on the ULIPs in the insurance market and its impact on
the person’s income.
1
TABLE OF CONTENTS
2
ACKNOWLEDGEMENT
It has been an immense pleasure and truly enriching experience doing my project with
TATA-AIG LIFE INSURANCE COMPANY LTD, PUNE
I take this opportunity to thank all those people who have made this experience a
memorable one..
Firstly, I would like to extend my sincere and hearty thanks to:
Mr.Parikshit Abroal (Cluster Head – Agency, Tata-AIG Life Insurance), and Mr. Nitish
Beohar (Senior Manager BA) who gave me an opportunity to associate myself with the
Tatas.
I would like to thank Mr. Rahul Bendre (Business Manager – Tata- AIG Life Insurance),
Mr. Kaizad S. (DCM, Kotak Mahindra Old Mutual Life Insurance Ltd.) and
Mrs.Benaifer.S (Senior Officer, Finance Control, Societe Generale Corporate and
Investment Banking) who provided me guidance and support from time to time.
Last but not the least I extend my special gratitude to The Advisors of Tata-AIG Life
Insurance Mr. Shrikant Verma, Mr. Sudhir Chavan, Mr. Dattatray.Phule and Mr.Vikram
Balwadkar who have contributed a lot in my project completion and the other advisors
who co- operated with me to carry out the market research and the library staff of
St.Miras College.
Delnaaz Doctor
3
Certificate from the Company
4
5
C
INTRODUCTION
The insurance plays a major role in the life of the humanity. Slowly people stared to realize the
necessity of the insurance and these needs are unending as long as life exists. In fact insurance is
not restricted for any category neither of the society nor in term of cast, ages or life styles. Also
many people have a notion that Insurance is very good form of an investment, which is not right.
Insurance is just creating a protection for you and your family.
As Indian investors are now more exposed to the capital markets and have started understanding
its working, they want to multiply their money rapidly.
This can be done through Unit Linked Insurance Plans (market linked plans ) introduced by the
Insurance Players.
Therefore the only reasons for selecting this topic are
• To get more knowledge about insurance sector in India
• To undergo a comprehensive study of ULIPs.
• To get experienced of corporate scenario.
6
COMPANY PROFILE
Getting associated with a brand like Tata –AIG for just 2 months was really a
prestigious and a memorable period in my MBA tenure. Growth has been the main objective of
the company and will continue to be the driving force in the years to come by spreading the
wings wider in India and contribute in the economic and social development.
• Over 260,000employees
• Operates in 130 countries worldwide
• Trusted by over 3 million shareholders
• Diversified business interest ( 92 companies)
• Largest FOREX earner
• Revenues of US $ 14.25 billion
• Deep rooted commitment towards society.
7
The Group: AIG
American International Group is a leading US based international
insurance and financial services organization and the largest
underwriter of commercial and industrial insurance in the United
It is a joint venture between TATA and AIG. It provides insurance cover for both for life
and group. It deals in all kinds of products. And now concentrates more on UNIT LINKED
PLANS.
It is Tata-AIG which consumers trust the more when it comes to giving exact claim
valuation, best in consumer satisfaction and trusted as the best in quick disposal of claims.
Its working is based on Business brought up by Business Associates who are the
advisors/agents for the company.
Areas of business
Tata AIG Life Insurance products include a broad array of life insurance coverage to both
individuals and groups. For groups, the company has life products whereas for individuals,
it has term products, endowment products as well as money-back products. For groups and
individuals, various types of add-ons and options are available to give consumers
flexibility and choice. The company has also designed specific products for the financially
challenged and underprivileged.
8
Some of the features are:
• 74% Stake of TATAs and 26% of AIG
• Licensed to operate on February 12, 2001
• Has over 190 branches and planning to increase the number to 120 plus by August
2007 , and 300 plus by November 2008.
• Over 5 lac + policy holders.
Tata AIG is all set to scale greater heights and has arrived at a vision of making it
A BILLION DOLLAR COMPANY BY 2009
AIG (26%)
TATA (74%) Martin J. Sullivan
Ratan Tata President & Chairman
Chairman CEO
9
RESEARCH METHODOLOGY
• Research design –descriptive
• Data sources- primary data and secondary data
• Research approach – face to face interview, observation, individual depth interview
• Research instrument –questionnaire.
Data Collection:
Primary Data:
1) Use of a Questionnaire for carrying out a survey
2) Presentation given by the Advisors of Tata AIG life.
3) Data explaining the working of the ULIPs.
Secondary Data:
1) Books
2) Newspapers
3) Magazines
4) Newsletter
5) Internet
6) Television
7) Booklet
8) Policy Brochures
This project is about studying the insurance industry which is on the boom.
The introductory part contains the meaning of insurance, its evolution, some,
Statistics of Indian insurance Industry.
The project deals the comprehensive analysis of the ULIP schemes, what is ULIP all
about, its NAV performance, the Growth, performance of the policies since their
inception, its working, its popularity and a market survey.
10
INTRODUCTION TO INSURANCE
Today, only one business, which affects all walks of life, is insurance business. That’s
why insurance industry occupies a very important place among financial services operative in
the world. Owing to growing complexity of life, trade and commerce, individuals as well as
business firms are turning to insurance to manage various risks. Therefore a proper
knowledge of what insurance is and what purpose does it serve to individual or an
organization is therefore necessary.
We
ma educ
a lt h
cre
’s
en
atio
ildr
n
Ch
Life
Life insurance
insurance –– the
the only
only instrument
instrument that
that takes
takes care
care of
of
these
these 33 probabilities
probabilities and
and 22 priorities
priorities
11
ii) Benefits:
1) SAVINGS
For unforeseen circumstances.
2) EDUCATION
For child’s education and for higher studies.
3) RETIREMENT
Facilitates adequate savings for worry free retired life.
iii) Insurance ------------a Flash back:
The earliest transaction of insurance as practiced today can be traced back to the 14th
century AD. The business of insurance started with marine business by Traders who
used to gather in the Lloyd’s coffee house in London, wherein they had agreed to insure
their ships in transit.
The 1st Life Insurance Policy was issued on 18 th June, 1583, on the life of
William Gibbons for a period of 12 months.
Life Insurance in its current form came in India from the UK, with the
establishment of British firm, Oriental Life insurance Company, in 1818
The 1st Indian insurance company was the Bombay Mutual Assurance Society Ltd,
formed in 1870.
By the year 1956, when the life insurance business was nationalized and the Life
Insurance Corporation Of India ltd (LIC) was formed on 1st September, 1956 and
there were 245 companies existing at that time in India.
By 31.3.2002, eleven new insurers had been registered and had begun to transact
Life insurance business in India.
12
IV) INSURANCE CLASSIFICATION
Life
Term
Endowment
Unit-linked
Money-back
1) Asia is amongst the world’s largest insurance markets contributing nearly 39% of global
insurance business.
2)The Life Insurance Industry has grown by 27% p.a. over the last 5 years and by about 62%
in the first eleven months of 2006 -07.
Source – IRDA Journal (April 2007)
3) Global Life Insurance Market: $1,521 billion, Global Non-Life Insurance Market: $922
billion
5) Out of one billion people in India, only 35 million people are covered by insurance.
7) Indian insurance market is set to touch $50 billion by 2010, on the assumption of a 7%
growth in GDP
(CII Projections 2001-2002)
8) The Insurance premium as a % of GDP in 2005 increased to 3.14% and is set to touch
4.3% in 2008.
(Source – Lifeline 26th Dec 2006)
13
Growth Rate of Insurance sector
• Public Sector: 5.5%
• Private Sector: 57.4%
Private Players
2. Tata AIG Life Insurance Company Ltd
3. Kotak Mahindra Old Mutual Life Insurance Ltd
4. Birla Sun Life Insurance
5. ICICI Prudential Life Insurance
6. Aviva Life Insurance
7. Allianz Bajaj
8. Max New York Life Insurance
9. Bharti Axa Life Insurance
10. SBI Life Insurance
11. Reliance Life Insurance
12. ING Vysya Life Insurance
13. Sahara India Life Insurance
14. HDFC Standard Life Insurance
15. Shriram Group
14
MARKET SHARE FOR 5 YEARS.
Market Share of public sector and Private sector Insurance Companies for 2006-07
market share
LIC PRIVATE
PRIVATE
26%
LIC
74%
15
MARKET SHARE OF PRIVATE INSURANCE COMPANIES 2006-07
16
COMPETITOR’S COMPARISION
LIC ranks 1st (public sector) in case of the premiums followed by ICICI PRU in the
private
Sector whereas Tata AIG Ranks 10th.
17
Comparative Study on
ULIPS
In the Indian Insurance
Market
18
CHAPTER 1
1.1) INTRODUCTION
ULIPS also known as UNBUNBLED, VARIABLE INSURANCE PLANS has possibly
been the single largest innovation in the field of life insurance in the past several decades. It
wasn’t too long back, when the good old endowment plan was the preferred way to insure
oneself against an eventuality and to set aside some savings to meet one’s financial
objectives. Then insurance was thrown open to the private sector. The result was the launch
of a wide variety of insurance plans, including the ULIPs.
Two factors were responsible for the advent of ULIPs on the domestic insurance horizon.
First was the arrival of private insurance companies on the domestic scene. ULIPs were one
of the most significant innovations introduced by private insurers. The other factor that saw
investors take to ULIPs was the decline of assured return endowment plans.
These were the two factors most instrumental in marking the arrival of ULIPs, but another
factor that has helped their cause is a booming stock market. While this now appears as one
of the primary reasons for their popularity, it is believed that ULIPs have some fundamental
positives like enhanced flexibility and merging of investment and insurance in a single entity
that have really endeared them to individuals. ULIPs came to play in the 1960s and became
very popular in western Europe and Americas.
19
1.2) MEANING OF ULIPS
A policy, which provides for life insurance where the policy value at any time varies
according to the value of the underlying assets at the time. ULIP is life insurance solution that
provides for the benefits of protection and flexibility in investment. The investment is
denoted as units and is represented by the value that it has attained called as Net Asset Value
(NAV). In order to offset the erosion of money, ULIPS are introduced. The Sum Assured is
expressed in units whose price is linked to an inflation related index.
In today’s times, ULIP provides solutions for insurance planning, financial needs,
financial planning for children’s future and retirement planning.
Features of ULIPs distinguish itself through the multiple benefits that it provides to
the customer which are as follows
• Life protection
• Investment and Savings
• Flexibility
• Adjustable Life Cover
• Investment Options
• Transparency
• Options to take additional cover against- Death due to accident- Disability- Critical
Illness- Surgeries·
• Liquidity·
• Tax benefits.
According to Vijay Sinha, Asst Director Agency, Tata – AIG LIFE Insurance,
“ULIPs is ideal for some one who is looking for a long term investment product, is
under insured and is averse to taking a traditional life plan. ULIP should be looked at
from both an investment as well as insurance point of view and not in isolation.”
Today many individuals are adding ULIPs to their portfolios to generate wealth.
and protection over a long time.
20
1.3 ) ULIPS VERSUS ENDOWMENT
The following points help us to get a better idea how ULIPs differ from Traditional
(Endowment Plans)
1) SUM ASSURED:
This is the most fundamental difference between ULIPs and the traditional plans.
In case of endowment the agent will ask you “HOW MUCH INSURANCE
COVER DO YOU NEED?” & the premium is calculated as per the estimated sum
assured.
In case of ULIPs you are asked “HOW MUCH PREMIUM CAN YOU PAY?” &
accordingly the Sum Assured is estimated.
2) INVESTMENTS:
Endowment plans invest in
• Government Securities
• Corporate bonds
• Money market instruments
( no investment in the stock market)
ULIPs invest in
• Equities
• Bonds
• G-secs
• Money market.
3) FLEXIBILITY:
In case of ULIPs the investor can choose the fund in which he wants to
allocate his portfolio. He can go for pure Equity, or a combination of debt-
equity ,depending on his requirements.
The investor also has the option of switching from one fund to another .
Usually Free switches are given during the year.
This option is not available in case of Endowment.
21
4) TOP UP FACILITY:
A top up is a one time additional investment in the ULIP over and above the annual
premium. This feature works well when you have a surplus that you are looking to invest in a
market linked avenue, rather than keeping in an FD or Savings account.
This feature is not for Endowment.
5) TRANSPARENCY:
ULIPs are more transparent than Endowment Plans as their NAV is declared
EVERYDAY. As a result you can know how your ULIP has performed.
In case of Endowment, the insurance company sends you an annual statement of bonus
declared during the YEAR. , which gives us an idea how our plan is performing.
6) LIQUIDITY:
Since ULIPs investments are NAV based it is possible to withdraw a portion of Your
investments before maturity (after 3yrs lock in period is over).The withdrawal is possible
provided the minimum fund value is maintained.
In case of Endowment, you can only Surrender your policy, but you wont get
everything that you have earned on your policy in terms of premium and bonus. The
Surrender Value is much less than the Sum Assured and the Bonus is also not paid.
22
1.4) ULIPS AND YOU
IRDA has played a part in making ULIPs more investor friendly. Today more individuals
are opting for ULIPs to create wealth over a long term. Over here I have outlined how ULIPs
can help you to fulfill that responsibility.
ULIPs help you to save for your child’s education, marriage, planning for your retirement and
providing for your family in case of your absence.
ULIPs Endowment plan------------- for helping you to meet investment objectives like buying
a house or setting up a business.
23
1.5) EXPENSES IN ULIPs
c) Fund Management charges: are levied by Insurance companies to cover the expenses
incurred by them in managing ULIP monies. Charges are high for managing monies
in an Equity Fund.
d) ULIP Fund switch charges: Such are borne by the individuals when they decide to
switch their money form one type of find to another.
e) Top up Charges: A certain % is deducted from the Top up amount to recover the
expenses incurred on managing the same.
24
1.6) HOW ULIPS MANAGE MONEY
Equity
RISKS
Balance
d
Debt
Money
Market
RETURNS
In case of equity, the risk and return is the highest, and vice verse for Money market
instruments.
It is a principle of Financial management, the higher the risks you take , the higher the return
you get.
25
1.7) STEPS FOR ULIP SELECTION
It is estimated that India’s economy will become the 3rd largest economy within a few
yrs, with a high GDP growth and a low inflation rate, followed by booming stock
market (SENSEX soaring as high as 20,000 points). So right time to increase your
wealth and become rich starts from today. And ULIPS are the best to invest in.
26
CHAPTER 2
2) Primary Objective :- Its main objective is investment & protection Its objective is only investments.
3) Investment Duration:- It works out for long term investment only . It works out to medium term, long term, & short
term. Risky for short term investors.
5) Expenses :- Insurance companies have a relatively free hand in In MFs, expenses charged for various activities like
levying expenses on their ULIP products with no upper sales/marketing, administration and fund
limits being prescribed by the regulator, the Insurance management are capped (for example in equity-
Regulatory and Development Authority (IRDA) oriented mutual funds, expenses are capped at 2.5%
27
per annum) as per the guidelines of the Securities and
Exchange Board of India (SEBI). Similarly funds
usually charge their investors entry (at the timing of
making an investment) and exit (at the time of sale)
loads.
6) Flexibility :- Flexibility is limited to moving across different funds Very flexible. Plenty of scope to correct mistakes if
offered with policy. Correcting mistakes can turn out to any wrong investment decisions are made. Portfolios
be expensive. Moving funds from one ULIP to another can be easily shuffled in MFs.
ULIP of a different fund house can be expensive.
7) Liquidity :- Limited liquidity .It need to stay invested for minimum Very liquid. MF units can be sold any time(except
years before redeeming. ELSS).
8) Investment Objective ULIPs can be used for achieving only long term MFs can be used as vehicle for investments to
:- objectives (Children education, marriage, Retirement achieve different objectives.(E.g.: Buying a car three
planning). years from now. Down payment for a home five
years from now. Children’s education 10 years from
now. Children’s marriage 15 years from now.
Retirement planning 25 years from now. Medical
expenses after retirement 25 years from now).
9) Flexibility of Switch- Insurance companies permit their ULIP investors In MFs an investor usually is subjected to exit load
overs :- usually 3-4 switch overs free of charge and thereafter and/or entry load when he/she exercises a switch over
every additional switch over beyond the permissible limit option.
is permitted at some cost.
10) Minimum Lock- in ULIPs currently are with a minimum lock-in of three MF schemes (except ELSS which has a lock-in of
Period years. three years) do not have any such lock in.
28
11) Investment styles Insurance companies declare their portfolios once in a Most MFs usually declare their portfolios on monthly
and Portfolio quarter and their investment style are less aggressive and basis and MFs are generally known to be more active
they resort to less churning. in fund management
Disclosures :-
12) Tax benefits and Irrespective of the nature of the plan chosen by the In the case of mutual funds, only investments in tax-
implications :- investor, all ULIP investments qualify for deductions up saving funds i.e Equity-linked savings schemes
to one lakh under Section 80C of the Income Tax Act. In (ELSS) are eligible for Section 80C benefits
the case of ULIPs the maturity proceeds are tax-free.
On the other hand, in the case of equity-oriented
mutual funds, if the investments are held for a period
over 12 months, the gains are tax free and if sold
within a 12-month period they attract short-term
capital gains tax @ 10 percent.
Similarly, debt-oriented funds attract long-term
capital gains tax @ 10 percent while short-term
capital gain is taxed at the investor’s marginal tax
rate.
29
Mutual funds are essentially short to medium term products. The liquidity that these
products offer is valuable for investors.
ULIPs, in contrast, are now positioned as long-term products and going ahead, there
will be separate playing fields for ULIPS and MFs, with the product differentiation
between them becoming more pronounced.
ULIPs now do not seek to replace mutual funds, they offer protection against the risk of
dying too early, and also help people save for retirement.
Insurance has to be an integral part of one’s wealth management portfolio. ULIPs and
mutual funds are, therefore, not likely to cannibalise each other in the long run.
While ULIPs as an investment avenue is closest to mutual funds in terms of their
functioning and structure, the first and foremost purpose of insurance is and will always
be ‘protection’. The value that it provides cannot be downplayed or underestimated. As
an instrument of protection, insurance provides benefits that no investment can offer.
It is important for an investor to understand his financial goals and horizon of investment
in order to make an informed investment decision. The decision to invest in either a
mutual fund or a ULIP should depend on the time period of investment, individual
financial goals as well as risk taking appetite, and it’s about time the industry and
customer realize it.
CHAPTER 3
COMPARATIVE ANALYSIS OF ULIPS
This chapter covers the comparison of ULIPs of 4 Insurance companies, how much growth
the fund has showed since its
Inception, returns for a period of one month compared with the market and tracking of the
NAVs for a period of one month.
Initially ULIPs were started by a few private players way back in 2001-02.
But now almost every Insurance company has got ULIPS suiting the varied requirements of
the customers.
If one has to choose among the ULIP schemes provided by the insurance, it is necessary to do
a through
comparison to choose the right one for you.
Besides these TATA –AIG also provides some other ULIPs which are as follows:
• Invest Assure Gold
• Invest Assure Plus
• Invest Assure
31
Tata – AIG Life Insurance ICICI Prudential Reliance Life Life Insurance
Company Corporation
(Invest Assure II) (Life Time Super) (Automatic Investment Plan) (Market Plus)
1) Policy objective :-
It is a unique, flexible insurance A regular unit linked insurance The plan promises enhanced life The unique plan promises a safe
plan which combines security of policy that offers flexible cover with complete flexibility to and a tension free life along
life with the opportunity to exploit investment options along with the gain control over your with a good amount of wealth
the upside of the market returns by benefit of life insurance cover, investments in tune with your creation.
investing in different kinds of and an opportunity to earn financial needs and your risk
securities through multiple fund potentially higher returns on your appetite.
options. investment without sacrificing
the protection of your family.
2) Eligilibility Criteria
(Minimum, Maximum age at
entry):-
Min age= 30 days Min age= 0 Min age= 0 Min age= 18 years complete
Max age= 45,55,65 years Max age= 65 years Max age= 65 years Max age= 70 years (age nearer
birthday)
3) Policy term :-
15, 20, 30 years 10- 75 years 40- 75 years 5-30 years
4) Premium (Minimum):-
32
Rs 12000 pa Rs 18,000 pa Rs. 10000 pa Rs 5000 pa
5) Mode of Premium
Payment:-
Annually, half yearly, quarterly, Annually, half yearly, monthly. Annually, half yearly, quarterly, Annually, half yearly, quarterly.
monthly. monthly
8)Riders :-
Accidental Death Benefit Accident & Disability Benefit Accident Death & Accidental Accident Benefit.
Accidental Death & Critical Illness Total & Permanent Disablement
Dismemberment Waiver of premium benefit.
33
Waiver of premium Term life insurance benefit
Payor Benefit
Critical Illness
9) Fund options :-
Option of choosing from 5 funds or We offer you 6 investment funds. Tailor made and Readymade Growth Fund: Debt (0-40%)
a combination of them. funds. Equity (60-80%)
Equity fund: Equity shares.(100%) Flexi Growth: Equity & Related Tailor Made:
Securities Debt, Money Market Money Market (100%) Balanced Fund: Debt (0-70%)
Income fund: Government Bonds & Cash (80-100%). Gilt (100%) Equity (30-50%)
& Fixed Income Instruments. . Corporate (100%)
(100%) Maximiser: Equity & Equity Equity ( 100%) Secured Fund: Debt (0-85%)
Related Securities Debt, Money Equity (15-35)
Aggressive growth fund: Equity Market & Cash (25%-100%) Readymade:
(50-80%), Government Bonds (20- Fund A Bond Fund: Debt (100%)
50%). Flexi Balanced: Equity & Fund B Equity (0%)
Related Securities Debt, Money Fund C
Stable Growth Fund: Government Market & Cash (60-100%)
Bonds (50-70%), Equity (30-50%)
Balancer: Equity & Equity
Short Term Fixed Income Fund: Related Securities Debt, Money
Government securities & Fixed Market & Cash (40-100%)
Income Instruments (100%),
Money Market Instruments (20%). Protector: Debt, Money Market
& Cash (100%)
34
Preserver: Debt, Money Market
& Cash (50-100%)
35
then the policy will be surrendered. revived within a period of 2 will be terminated.. And the
years, if not then the policy will policy will be surrendered.
In case of lapse, only the Fund be surrendered.
Value will be given on death. (no
SA) In case of lapse, only the Fund
Value will be given. (no SA)
36
14) Grace Period: -
Here the grace period provided is Nothing is mentioned about the For regular premiums the grace Nothing is mentioned about the
for 31 days. grace period in the policy period is for 30 days, grace period in the policy
brochure. For monthly premiums grace brochure.
period is for 15 days
37
17)Top Up premium:-
Minimum top up amount is Rs Amount not mentioned. Minimum top up amount is Rs Minimum top up amount is Rs
10,000 2500 1000.
38
19)CHARGES
Most of the life insurance companies incur certain charges which are as follows:
a) MORTALITY CHARGES
b) FUND MANAGEMENT CHARGES
c) SWITCH OVER CHARGES
d) POLICY ADMINISTRATION CHARGES
39
a) MORTALITY CHARGES
MORTALITY CHARGES
20
18
16
14
RATES (RS)
12 Reliance
10 ICICI
8 Tata AIG
6
4
2
0
20yrs 30yrs 40yrs 50yrs
AGE
Interpretation:
The mortality charges of Reliance (Automatic Investment Plan) are the highest whereas The
charges of Tata AIG (Invest Assure II) is the least.
40
b) FUND MANAGEMENT CHARGES
(Only for Equity Fund)
FMC CHARGES
2.50%
2.25%
2.00%
1.75%
1.50% 1.50%
RATES % pa
1.50%
CHARGES
1.00%
0.50%
0.00%
Tata AIG ICICI Reliance LIC
COMPANY
Interpretation:
ICICI have the highest FMC whereas Charges of Tata AIG are comparatively
higher than the other two.
41
c) SWITCH OVER CHARGES
Tata AIG ( Invest ICICI (Life Time Reliance LIC (Market Plus)
Assure II) Super) (Automatic
Investment Plan)
The first 4 switches The first 4 switches The first 25 The first 4 switches
per policy will be per policy will be switches per policy per policy will be
free. free. will be free. free.
Charge (Rs)
Tata AIG ( Invest Assure II) 250
Tata AIG
ICICI
Reliance
LIC
2000
Interpretation: Even in this case ICICI has got the highest switch over charge, whereas charge
of
Tata AIG are comparatively than the other two. Over here Reliance proves to be superior as it
provides 52 switches free as compared to just 4 switches offered by others and its charges are
. also less
42
d) POLICY ADMINISTRATION CHARGES
Charges( Rs /month)
Tata AIG ( Invest Assure II) 38
60
60
50
38 40
40
RATES 30
20 CHARGES per month
10
0
Tata AIG Reliance LIC
COMPANY
Interpretation: In this case charges of Tata AIG are higher than LIC but lower than Reliance.
43
GROWTH & RETURNS
From the tabular compilation, it can be observed that the Equity Fund of the policies has
performed very well over the years.
In case of Tata AIG--------the Equity Fund has grown up to 204.5% in 3 years from the
date of inception.
In case of ICICI--------the Equity Fund has grown up to 433.2% in 5 years from the date of
inception.
Also Reliance Equity Fund has increased to 9.8% in a short span of 2mths.
LIC has also done a good job with a growth up to 18.9% in 1 year.
44
COMPARISON OF RETURNS
RETURNS OF Tata AIG Equity Fund, ICICI equity fund, Reliance equity fund,
LIC equity fund,
V/s
45
RETURNS
12.00% 10%
10.00% 7.79% 8.20% 8% 7.40%
8.00%
RATES
5.60%
6.00%
4.00%
2.00%
0.00% nd
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ICICI Equity Fund has outperformed all others giving the highest returns, followed
by Reliance.
46
FUND PERFORMANCE
(Only of Equity Fund)
Period: 1month
47
N A V (R S )
6 /2
0
10
20
30
40
50
60
0/
6 /2 2 0 0 7
2/
6 /2 2 0 0 7
4/
6 /2 2 0 0 7
6/
6 /2 2 0 0 7
8/
6 /3 2 0 0 7
0 /2
7/2 0 0 7
/2
7/4 0 07
/2
7/6 0 07
/2
7/8 0 07
/
7 /1 2 0 0 7
0 /2
1 MONTH (20JUNE--20JULY)
7 /1 0 0 7
2/
7 /1 2 0 0 7
4/
7 /1 2 0 0 7
FUND PERFORMANCE
6/
7 /1 2 0 0 7
8/
GRAFICALLY.
7 /2 2 0 0 7
0 /2
00
7
LIC ( Market Plus)
ICICI (Life Time Super)
Tata AIG (Invest Assure II)
CONSOLIDATED FUND PERFORMANCE SHOWN
48
NAV RS
6 /2
26.5
27
27.5
28
28.5
29
29.5
30
30.5
31
31.5
0 /2
6 /2 0 0 7
2 /2
6 /2 0 0 7
4 /2
6 /2 0 0 7
6 /2
Super
6 /2 0 0 7
8 /2
6 /3 0 0 7
0 /2
7 /2 0 0 7
/2 0
7 /4 0 7
TATA AIG
/2 0
7 /6 0 7
/2 0
Invest Assure
DATES
7 /8 0 7
/2
7 /1 0 0 7
0 /2
7 /1 0 0 7
2/
45
46
47
48
49
50
51
52
53
54
0 /2
6 /2 0 0 7
2 /2
6 /2 0 0 7
4 /2
6 /2 0 0 7
6 /2
6 /2 0 0 7
8 /2
6 /3 0 0 7
0 /2
7 /2 0 0 7
/2 0
7 /4 0 7
/2 0
7 /6 0 7
/2
Dates
7 /8 0 0 7
/2
7 /1 0 0 7
0 /2
7 /1 0 0 7
ICICI (Life Time Super)
2/
7 /1 2 0 0 7
4 /2
7 /1 0 0 7
6 /2
INDIVIDUAL EQUITY FUND PERFORMANCE
7 /1 0 0 7
8 /2
ICICI
7 /2 0 0 7
0 /2
00
7
Life Time
49
ICICI (Life Time Super)
nav R s
6 /2
9
9.5
10
10.5
11
11.5
12
0
6 /2 /2 0 0 7
2
6 /2 /2 0 0 7
4
6 /2 /2 0 0 7
6
6 /2 /2 0 0 7
8 Plus
6 /3 /2 0 0
0/ 7
7 /22 0 0 7
/2
RELIANCE
7 /4 0 0 7
/2
7 /6 0 0 7
/2
Dates
7 /8 0 0 7
7 /1 /2 0 0 7
0
7 /1 /2 0 0
2 7
7 /1 /2 0 0 7
4
7 /1 /2 0 0 7
6
7 /1 /2 0 0 7
Reliance (Automatic Investment Plan)
8
7 /2 /2 0 0 7
Automatic Investment Plan
0 /2
00
7
N av R s
6/2
10.6
10.8
11
11.2
11.4
11.6
11.8
12
0 /2
6/2 00
2 /2 7
6/2 00 7
4 /2
6/2 00 7
6 /2
6/2 00 7
8 /2
6/3 00 7
0 /2
0
7 /2 0 7
/2 0
7 /4 0 7
/2 0
7 /6 0 7
Dates
/2 0
7 /8 0 7
/2
7/1 007
LIC ( Market Plus)
0 /2
7/1 00 7
LIC
2 /2
7/1 00 7
Market
4 /2
7/1 00 7
6 /2
7/1 00 7
50
8 /2
7/2 00 7
0 /2
00
7
LIC ( Market Plus)
From the above graphs, it can be seen that the NAV of Reliance Automatic Investment plan
is fluctuating less as compared to the others.
NAV of ICICI Life Time Super has fluctuated more as compared to the others.
Tata AIG has moderate NAV Fluctuations
It has been observed that the lesser the fluctuations in the NAV, the better it is
for the fund.
But the good thing is that all the NAVs are on a rising trend. which indicates the
strength of the Equity Fund.
Thus as far as NAV consistency is concerned, investing in Reliance Equity Fund can be a
Prudent decision.
It is expected that the NAVs will rise in the future, promising good returns for the
Investors.
51
OVERALL DATA ANALYSIS & FINDINGS
This analysis is done by giving ranks to all the policies taking into consideration the
following criteria
(1= excellent, 2=good, 3=fair, 4=average)
In the end, whichever fund has the least score will be the best buy
CRITERIA TATA ICICI RELIANCE LIC
AIG
Amount of Premium 3 4 2 1
Mode of premium payment 1 2 1 2
Revival of the Policy 1 3 2 3
Amount of Top up premium 1 Not given 2 3
Oldest policy 2 1 4 3
Policies issued 4 2 3 1
Premiums collected 4 2 3 1
Mortality charges 1 2 3 Not given
FMC 2 3 1 1
Policy Administration charges 2 Not given 3 1
Switch over charges 2 3 1 1
Fund performance 2 1 3 4
Returns 3 1 2 4
Market share 4 2 3 1
TOTAL SCORES 32 26 34 26
From the above analysis it can be said that, ICICI and LIC have scored the least.
Therefore a person can either buy a ULIP form ICICI or from LIC.
52
CHAPTER 4:- UNDERSTANDING THE WORKING OF ULIPS of Tata AIG
ULIPs are said to be the most lucrative from of investment, which not only
give you high market returns but also protection from risk, and also secures
the livelihood of your loved ones even after your death.
Here is an illustration which explains how a ULIP makes your money work.
Harder than you.
Insurance plan Benefit Premium Premium Annual Modal Sum Additional Fund
period Paying multiple premium premium Assured coverage
period (SA)
Invest Assure II 30 yrs 30yrs 22.50 12000 12000 270000 270000 Equity
100%
53
Note : 1)SA is the multiple of annual premium: 12000*22.50= 270,000
2) Additional coverage given as Accident Death Benefit Rider taken by the policy holder.
3) Investment in Equity is 100%.
1% 99%= Rs 11880
50% 50%= Rs 6000 25% 75% = Rs 9000 Return= Rs 1188
Return =Rs 600 Return= Rs 900 Total = Rs 13068
Total =Rs 6600 Total = Rs 9900
No. of units = Rs16500/ 20= 825 units No of units= Rs 29568/ 30=986 units
54
TOTAL UNITS IN HAND: 660+825+986=2471 UNITS AFTER 3 YEARS.
Therefore the units keep on increasing with the change in the NAVs.
There is an inverse relation between the NAVs and the No. of Units.
As the NAVs rises the no of units decrease.
& As the NAVs fall, the No of Units increase.
E.g.: In the 3rd year, the investment was Rs 29568. NAV was Rs 30. So the no. of Units was 986.
Now if the NAV Falls to Rs 20. Then the no. of Units would have been 1479.
55
Therefore the rising trend of NAV is not always a good sign, as your
no of units decrease.
Therefore if Miss Dimple Solanki continues with her policy for 30 years ,
she will get a
56
CHAPTER 7
MARKET SURVEY
A questionnaire was prepared, wherein 10 advisors of Tata AIG were asked to fill
it. The reason for carrying out a market survey was to know the opinion of the
advisors and the popularity of ULIPs in the market.
pensi oner , 0%
57
Q 2) Which policies the client opts for?
a. Traditional
b. ULIPS
100% 90%
90%
80%
70%
60%
50%
40%
30%
20% 10%
10%
0%
Traditional ULIPs
Schemes
CAN'T
SAY, 0%
NO, 30%
YES
NO
CAN'T SAY
YES, 70%
58
Q 4) Are the clients aware of ULIP schemes?
a. less than 10%
b. 10% --- 30%
c. 30%---- 60%
d. Above 60%
0%
20%
30%
Less Than 10%
10%- 30%
30%- 60%
60%& above
50%
40%
b. 11—20%
0%
c. 21---30% 0-10% 11%-20% 21%-30% 31%-40%
d. 31--- 40%
C o mmissio n
59
Q 7) How many clients have the background of finance?
a.10—20%
b.20—40%
c. 40% & above
10%-
0%
20%
40% 20%-
60% 40%
40%-
above
demand draft,
0%
cash, 0%
cheque
demand draft
cash
cheque, 100%
60
Q9) What is the better positioning for ULIP?
a. as a tax saving plan
b. as a retirement plan
c. as a child education plan
d. as a security cum profitable plan.
80%
70%
70%
60%
50%
40%
30%
20%
20%
10%
10%
0%
0%
as a tax saving as a retirement as a child as a security
plan plan education plan cum profitable
plan
Q 10) Qualifications
a. HSC pass
b. Graduate c.MBA
60%
50%
50%
40%
30%
30%
20%
20%
10%
0%
HSC Graduate MBA
61
Q 11) How is ULIP different from the other policies?
Q 12) How does a client respond, if any new policy is suggested to him?
ANS: According to the survey, the client’s reaction depends upon the presentation that is
given to him by the Advisor.
Usually the client shows positive signs of buying the product, sometimes are reluctant to buy
due to financial problems.
According to most of the advisors the 1st quest asked by the client is about the guarantee and
returns.
They want to know about the popularity of the policy as well as the insurance company.
62
CHAPTER 8
63
CONCLUSION:
From the above project , I would point out that the insurance industry is growing at a very
fast pace .The Insurance needs of the people are increasing.
ICICI Prudential is a key player in the private sector and LIC is a leader in the public sector
with the largest market share.
The returns provided by ICICI is the highest as compared to other companies and is superior
to others in all respects. Therefore a person can rightly choose to buy insurance from ICICI .
Thus ULIPs are simple combination of Term assurance and investment.
Synergy, flexibility, durable tax advantages, flexibity in debt- equity ratio, top up facility,
transparency, subjected to market conditions, capital appreciation makes ULIPs structurally
more effective for achieving long term financial goals.
There is no other investment avenue which provides double the amount invested, in case of
death due to accident or on death.
Therefore insurance has and should be a part of every person’s portfolio which satisfies twin
objectives of protection against risks & to increase your wealth.
Putting your money in the ULIP equity fund will give you a good return and capital
appreciation.
So relax and enjoy your life as ULIPs is there behind you.
64
RECOMMENDATIONS
2) The company can arrange a seminar for the existing clients informing them about the
progress made by the company, and also give some lessons on understanding the basics of
FINANCE.
3) Since ULIPs are less popular “as a retirement plan”, Tata AIG should advertise inorder to
attract the attention of salaried people and to make them understand the importance of
investing in ULIPS for retirement. Publicity on a large scale about the different policies to be
given in all means of communication. (Basically on TV during prime hours)
2. On maturity, the policy holder should receive the Fund value or the Sum Assured
whichever is higher, (as in the case of death benefit.)
65
BIBLIOGRAPHY
A. BOOKS
5. Taxmann Life Insurance agent ---- P.R. Khanna , Taxmann Allied service pvt
ltd
4th edition 2005.
B. NEWSPAPERS
1. Economic Times
2. Times Of India
3. ESCOLIFE PAPER on Insurance by Ritu Nanda
Vol 2, Issue viii June, 2007.
C. MAGAZINES
1. Money Simplified --Vol xxx ,Feb 2007 “ ULIPs how they fit in”
2. Consumer Voice ---Vol 7, Issue 3
66
D. NEWSLETTER
1. Tata AIG Life Agency Newsletter
Vol 1, Edition 6 , March ,2007.
E. INTERNET
www.tata-aig.com
www.licofindia.com
www.iciciprulife.com
www.reliancelife.com
www.moneycontrol.com
www.personalfn.com
www.et.com
www.google.com
(Note- The above Sites were logged on between 20 June,07 to 21st July,2007 )
F. CNBC TV 18
H. Policy Brochures of Tata AIG, ICICI Prudential, Reliance Life & LIC.
67
QUESTIONNAIRE FOR ADVISORS
Q 1) What type or class of customers visit your office?
• salaried
• housewives
• self employed
• retired
• pensioner
Q 6) How much commission do you get from the company on ULIP policy?
• 0--- 10%
• 11—20%
• 21---30%
• 31--- 40%
68
• as a tax saving plan
• as a retirement plan
• as a child education plan
• as a security cum profitable plan.
Q 10) Qualifications
• HSC pass
• Graduate
• MBA
Q 12) How does a client respond, if any new policy is suggested to him?
69
THANK YOU
70