Summer Training Project Report

(Completed In Tata AIG Bareilly)
Topic : Comparison Between ULIPs And Traditional Plans

Submitted To: Mr. PAVAN RATHI

Submitted By:MOHD. ZUBAIR M.B.A. 3rd sem. Roll No.:-820860072 G.J.E.S. Bareilly.

1

Preface
This Project Report is done to study “Comparative analysis of ULIPs V/s Traditional plans This Project Report is done by collecting the data from some magazine, Tata AIG life website, text book of life insurance. Money simplified (text book). Neev: product book. All the data has been gathered and then properly analyzed. The findings have been presented in a lucid manner.

2

ACKNOWLEDGEMENT
Generally it is said that “there is always a theory works behind practical” but I personally observed and reached to the conclusion that there is a practical behind every theory.To fulfill the requirement of our academic curriculum and to attain practical knowledge the present project work has been conducted under the mutual guidance of our academic lecture and corporate professionals. I would like to thanks Mr. Sailesh verma (Branch Manager of Tata AIG life Bareilly) and DR. Mohd Asive Khan (convenor of Business Administration) who helped me throughout the project. Last but not the least I would like to give a word of appreciation to those who have provided their full support for the successful completion of this project.

3

4 .

Insurance is a contractual arrangement that provides for compensation by an insurer to an insured party if or when a specified set of circumstances occurs. accident. or 2. Such circumstances may include death or personal injury. or 3-Unfortunate death. if it occurs earlier. unemployment or old age. The contract is valid for payment of the insured amount during: 1. or any one of a number of instances that can be compensated for financially. 5 . loss of or damage to property. The insurer conducts its operations by amassing relatively small contributions from many people who are exposed to the risk of occurrence of an unforeseen event in order to create a fund that is used to reimburse those insured who actually suffer from such an occurrence.Specified dates at periodic intervals. A promise of reimbursement in the case of loss.The date of maturity. A contract of insurance is embodied in a policy that specifies the terms under which the insurer agrees to indemnify the policyholder for loss in consideration of the payment of a stated premium or premiums.INTRODUCTION Life insurance is a contract that pledges payment of an amount to the person assured (or his nominee) on the happening of the event insured against. The contributions of the policyholders are called premiums. IN other words it’s a written contract or certificate of insurance that provides protection against future loss. paid (sum assured) to people or companies (insured) so concerned about hazards that they have made prepayments (premiums) to an insurance company (insurer).

as evidenced by the earliest known insurance contract (Genoa. hence the term underwriter. policies were signed by a number of individuals. Lloyd's had progressed into one of the first modern insurance companies. In London. By the middle of the 14th cent. marine insurance was practically universal among the maritime nations of Europe. based on the statistical laws of mortality and compound interest. 1347). Lloyd's Coffee House (1688) was a place where merchants. the medieval guilds undertook to protect their members from loss by fire and shipwreck.. and underwriters met to transact business. 6 . The Romans used burial clubs as a form of life insurance. to ransom them from captivity by pirates. previously the rate had been the same for all ages. providing funeral expenses for members and later payments to the survivors. The Phoenicians and the Greeks applied a similar system to their seaborne commerce. made it possible to scale the premium rate to age. each of whom wrote his name and the amount of risk he was assuming underneath the insurance proposal. By the end of the 18th cent.Brief History of Insurance Sector The roots of insurance might be traced to Babylonia. and to provide decent burial and support in sickness and poverty. Insurance developed rapidly with the growth of British commerce in the 17th and 18th cent. Prior to the formation of corporations devoted solely to the business of writing insurance. The table. With the growth of towns and trade in Europe. where traders were encouraged to assume the risks of the caravan trade through loans that were repaid (with interest) only after the goods had arrived safely—a practice resembling bottomry and given legal force in the Code of Hammurabi (c. ship owners.2100 BC). In 1693 the astronomer Edmond Halley constructed the first mortality table. corrected (1756) by Joseph Dodson.

for the benefit of Presbyterian ministers and their dependents. Fraternal orders continue to provide insurance coverage. Reinsurance. and in 1735. and the employees usually contribute a certain percentage of the premium. Many friendly or benefit societies were founded to insure the life and health of their members. The Presbyterian Synod of Philadelphia sponsored (1759) the first life insurance corporation in America. the first insurance company in the American colonies was founded at Charleston. S. was devised to meet such situations and is now common in other lines of insurance. In the 19th cent. such policies generally include not only life insurance. 7 . The great Chicago fire (1871) emphasized the costly nature of fires in structurally dense modern cities. it attained major importance with the advent of the automobile.C. Massachusetts was the first state to require companies by law (1837) to maintain such reserves. members-only insurance. and many fraternal orders were created to provide low-cost. In the 1830s the practice of classifying risks was begun. as do most labor organizations. After 1840. Public liability insurance. life insurance entered a boom period. The New York fire of 1835 called attention to the need for adequate reserves to meet unexpectedly large losses. whereby losses are distributed among many companies. fostered by legislation. made its appearance in the 1880s. Many employers sponsor group insurance policies for their employees. The Workmen's Compensation Act of 1897 in Britain required employers to insure their employees against industrial accidents. but sickness and accident benefits and old-age pensions. Fire insurance corporations were formed in New York City (1787) and in Philadelphia (1794).The first stock companies to engage in insurance were chartered in England in 1720. with the decline of religious prejudice against the practice.

S.Since the late 19th cent. citizens are paying for bad risks made by the companies.S. Constitution. hurricanes. Insurance companies place the burden of guilt on law firms and their clients. contending that U. Many blame the insurance conglomerates. After 1944 the supervision and regulation of insurance companies. most insurance companies in the United States were restricted to providing only one type of insurance. Congress repealed banking laws that had prohibited commercial banks from being in the insurance business. either temporary or permanent. since then it has provided other forms of insurance such as pensions for veterans and for government employees. who they say have brought unreasonably large civil suits to court. a trend that has become so common in the United States that legislation has been proposed to limit lawsuit awards. a landmark in this field being the Federal Crop Insurance Act of 1938. there has been a growing tendency for the state to enter the field of insurance.S. leaving unprecedented numbers of Americans uninsured. government has also experimented with various types of crop insurance. and multipleline companies now dominate the field. previously an exclusive responsibility of the states. Until the 1950s. In 1999. In World War II the government provided life insurance for members of the armed forces. especially with respect to safeguarding workers against sickness and disability. became subject to regulation by Congress under the interstate commerce clause of the U. In recent years insurance premiums (particularly for liability policies) have increased rapidly. and unemployment . destitute old age. 8 . and wildfires in late 1980s and the 90s have also strained many insurance company's reserves. Catastrophic earthquakes. many mergers have occurred. this measure was expected to result in expansion by major banks into the insurance arena. but then legislation was passed to permit fire and casualty companies to underwrite several classes of insurance. The U. Many firms have since expanded.

floods. Insurance in India has evolved over time heavily drawing from other countries. This was probably a pre-cursor to modern day insurance. namely Albert Life Assurance. the earlier legislation was consolidated and amended by the Insurance Act. England in particular. 1912 was the first statutory measure to regulate life business. Ancient Indian history has preserved the earliest traces of insurance in the form of marine trade loans and carriers’ contracts. In 1829. This Company however failed in 1834. however. epidemics and famine.History Of Insurance Sector In India In India. the Madras Equitable had begun transacting life insurance business in the Madras Presidency. Liverpool and London Globe Insurance and the Indian offices were up for hard competition from the foreign companies In 1914. the Indian Insurance Companies Act was enacted to enable the Government to collect statistical information about both life and non-life business transacted in India by Indian and foreign insurers including provident insurance societies. the Bombay Mutual (1871). The Indian Life Assurance Companies Act. This era. 1870 saw the enactment of the British Insurance Act and in the last three decades of the nineteenth century. was dominated by foreign insurance offices which did good business in India. the Government of India started publishing returns of Insurance Companies in India. Royal Insurance. The writings talk in terms of pooling of resources that could be re-distributed in times of calamities such as fire. 1938 with comprehensive provisions for effective control over the activities of insurers. 1818 saw the advent of life insurance business in India with the establishment of the Oriental Life Insurance Company in Calcutta. Yagnavalkya (Dharmasastra) and Kautilya (Arthasastra). insurance has a deep-rooted history. 9 . It finds mention in the writings of Manu (Manusmrithi). In 1928. Oriental (1874) and Empire of India (1897) were started in the Bombay Residency. with a view to protecting the interest of the Insurance public. In 1938.

It came to India as a legacy of British occupation. 1973. The Government of India. The General Insurance Corporation of India was incorporated as a company in 1971 and it commence business on January 1sst 1973. former Governor of RBI. 10 . the Government set up a committee under the chairmanship of RN Malhotra. the Oriental Insurance Company Ltd and the United India Insurance Company Ltd. general insurance business was nationalized with effect from 1st January. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector. namely National Insurance Company Ltd. the Indian Mercantile Insurance Ltd was set up. 107 insurers were amalgamated and grouped into four companies. to propose recommendations for reforms in the insurance sector. This was the first company to transact all classes of general insurance business. The Tariff Advisory Committee was also set up then. There were also allegations of unfair trade practices. therefore.The Insurance Amendment Act of 1950 abolished Principal Agencies. In 1968. In 1907.. The history of general insurance dates back to the Industrial Revolution in the west and the consequent growth of sea-faring trade and commerce in the 17th century. 1956 nationalizing the Life Insurance sector and Life Insurance Corporation came into existence in the same year. In 1972 with the passing of the General Insurance Business (Nationalization) Act. The process of re-opening of the sector had begun in the early 1990s and the last decade and more has seen it been opened up substantially.. However. there were a large number of insurance companies and the level of competition was high. This millennium has seen insurance come a full circle in a journey extending to nearly 200 years.. In 1993. An Ordinance was issued on 19th January. 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all. General Insurance in India has its roots in the establishment of Triton Insurance Company Ltd. in the year 1850 in Calcutta by the British. decided to nationalize insurance business. the Insurance Act was amended to regulate investments and set minimum solvency margins. the New India Assurance Company Ltd. The LIC absorbed 154 Indian.

preferably a joint venture with Indian partners. In December. The IRDA was incorporated as a statutory body in April.term funds for infrastructure development at the same time strengthening the risk taking ability of the country. 11 . the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry. while ensuring the financial security of the insurance market. Parliament passed a bill de-linking the four subsidiaries from GIC in July. the subsidiaries of the General Insurance Corporation of India were restructured as independent companies and at the same time GIC was converted into a national re-insurer. 2000. Together with banking services. A well-developed and evolved insurance sector is a boon for economic development as it provides long. The committee submitted its report in 1994 wherein. Foreign companies were allowed ownership of up to 26%. among other things. They stated that foreign companies are allowed to enter by floating Indian companies. 2000.The objective was to complement the reforms initiated in the financial sector. it recommended that the private sector be permitted to enter the insurance industry. Following the recommendations of the Malhotra Committee report. 1938 and has from 2000 onwards framed various regulations ranging from registration of companies for carrying on insurance business to protection of policyholders’ interests. The key objectives of the IRDA include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums. 2002. The insurance sector is a colossal one and is growing at a speedy rate of 15-20%. The IRDA opened up the market in August 2000 with the invitation for application for registrations. insurance services add about 7% to the country’s GDP. in 1999. The Authority has the power to frame regulations under Section 114A of the Insurance Act.

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. Tracing the developments in the Indian insurance sector reveals the 360degree turn witnessed over a period of almost 190 years. 12 .The insurance sector in India has Came in a full circle from being an open competitive market to nationalization and back to a liberalized market again.

1956. 5 crore from the Government of India. with a capital contribution of Rs. 1956 . viz. LIC Act.Some of the important milestones in the life insurance business in India are: 1912 . 1928 .Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 13 .245 Indian and foreign insurers and provident societies taken over by the central government and nationalized.The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1938 . LIC formed by an Act of Parliament.The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses.

No.200 7 IDBI Fortis Life Insurance Company Ltd.2001 03. Registration Date of Reg. Kotak Mahindra Old Mutual Life Insurance Limited Birla Sun Life Insurance Company Ltd.2000 24. ICICI Prudential Life Insurance Company Ltd.2000 15. Tata AIG Life Insurance Company Ltd.02. Number 1 2 3 4 5 6 7 8 9 10 11 101 104 105 107 109 110 111 114 116 117 133 23.10.2001 06.2001 02. Future General India Life Insurance Company Limited 12 135 19.12. Max New York Life Insurance Co.2001 31.2001 30.08.01.2001 04.08. Ltd.2007 Name of the Company HDFC Standard Life Insurance Company Ltd.11.2001 12.2000 10.11. ING Vysya Life Insurance Company Private Limited Bajaj Allianz Life Insurance Company Limited Metlife India Insurance Company Ltd.09.INDIAN INSURANCE COMPANY S. 14 . SBI Life Insurance Company Limited .01.03.08.

01. Aviva Life Insurance Co. 2002) Insurance Industry in this year. 2 122 14. namely Life Insurers: S.2004 Name of the Company Sahara India Insurance Company Ltd.05. 15 . 06. namely Life Insurers: S. 1 Registration Number 127 Date of Reg. 1 Registration Number 121 Date of Reg.No. so far has 5new entrants.2002 Yr: 2003-2004 : ( From 1st Jan 2003 till Date) Insurance Industry in this year. India Pvt. 03.No.Yr: 2001-2002: (From 1st Jan 2001 to Dec.2002 Name of the Company AMP Sanmar Life Insurance Company Limited. so far has 1new entrants. Ltd.02.

17. namely Life Insurers: S.11. 16 .Yr: 2004-2005 : Insurance Industry in this year. so far has 1new entrants. 1 Registration Number 128 Date of Reg.2005 Name of the Company Shriram Life Insurance Company Ltd.No.

17 .There are 18 private Co. which are working in life insurance sector:1-Bajaj Allianz 2-ICICI Prudential 3.Life insurance corporation 17.Future General India Life Insurance 18.IDBI Fortis Life Insurance Company Ltd.HDFC Standard 4-SBI Life 5-Birla Sun life 6-Tata AIG life 7-Max New York Life 8-Aviva Life 9-Kotak Mahindra 10-ING Vysya 11-Reliance Life 12-Met Life 13-Sahra Life 14-Shriram Life 15-Bharti Axa Life 16.

changing socio economic demography. ICICI Prudential. as per the data compiled by Insurance Regulatory & Development Authority. On the other hand.What are the opportunities for the players in this industry and what are the challenges to sustain the Insurance market in India? .Which factors will lead to the growth of Life and Non-life insurance in India? 18 . Reliance Life.What will be the prospective areas of investments in the insurance industry in the near future? . ING Vysya.Indian Insurance Industry Forecast (2008-2009) Life insurance market in India will likely reach around Rs 1683 Billion by the year 2009.How is the growth in Health and Group insurance are driving the Insurance sector in India? . Outstanding performance of SBI Life. Changing consumer behavior. The market is expected to grow at a CAGR of more than 200% YOY from the year 2006.What are the marketing strategies of the players in the insurance industry? . and natural calamities occurring from time to time will remain the key contributors in this growth. Key Issues:There are some issues and facts that are critical to business success: .892 crore. and Bajaj Allianz were amongst those insurers that came across a decline in their premium collection over the review period. and LIC helped the Indian life insurance industry in mopping up almost Rs 2. GDP growth rate.

Royal Sundaram. 14. 4-Tata AIG Life. 17. 9. 19 . 11. 8-Aviva Life Insurance. 10. 21.ING Vysya. 2. 16-Reliance General.HDFC Standard. 20. 12.Birla Sun life. 5. 6.Bajaj Allianz.Oriental Insurance Limited.National Insurance Company Limited.IFFCO-Tokio.Tata-AIG General. 13-LIC. 7. 18-ICICI-Lombard.Met Life.SBI Life.HDFC Chubb.Kotak Mahindra Old Mutual.New India Assurance Company Limited.Key Players This section provides an overview of some of the key players in this industry like 1. 19.Max New York Life. 22-United India Insurance Company Limited 23. 3.ICICI Prudential Life Insurance. 15.Sahara Life.

sales of general insurance are likely to continue to grow faster than sales of long-term insurance. and this is undoubtedly adding to the industry's cost base. the big problem for the industry is that people are not saving enough. The Commission may recommend some element of compulsion in personal pensions. the difference between the amount consumers need to save for their retirement and the amount they are actually saving. i. There is inevitably some concern about profitability in the industry. with the result that insurance companies have increased their number of outlets. At the same time. How long this situation will continue is debatable.The industry is under immense pressure to cut its costs.3% and 3. premium rates have been softening as insurers have undercut each other's prices in order to win business. In October 2005. Regulation by organizations such as the Financial Services Authority (FSA) and the EU is increasing. The insurance market will grow by between 3. since this sector accounts for the majority of sales. the Pensions Commission will deliver its recommendations on how to address the so-called pensions gap. Particular attention is being paid to long-term insurance. 20 . However. Unless consumer behaviour changes dramatically or the Government makes personal pensions compulsory. given that many in the industry believe that premium rates need to rise in order to make up for growth in the cost of claims. Changes in the rules governing the sale of insurance (as laid down by the FSA) have opened up new channels of distribution.e.7% each year between 2005 and 2009.

21 .

home personal. Tata AIG General Insurance Company. property and casualty.Tata AIG Tata AIG Life Insurance Company Limited (Tata AIG Life) is a joint venture company. Inc. Tata AIG Life provides insurance solutions to individuals and corporate. Tata AIG Life combines the Tata Group’s pre-eminent leadership position in India and AIG’s global presence as the world’s leading international insurance and financial services organization. marine. formed by the Tata Group and American International Group. The Tata Group holds 74 per cent stake in the insurance venture with AIG holding the balance 26 percent. 22 . offers the complete range of insurance for automobile. 2001. as well as several specialized financial lines. 2001. which started its operation in India on Jan 22. energy. Tata AIG Life Insurance Company was licensed to operate in India on February 12. accident. 2001 and started operations on April 1. travel. (AIG).

(AIG). measured by annualized premium growth.Tata AIG Life Insurance Company Ltd. and Tata AIG General Insurance Company Ltd. Inc. (collectively "Tata AIG") are joint venture companies. formed from the Tata Group and American International Group. 23 . procuring persistent business. adding shareholder value in the coming year. TATA AIG VISION To be the fastest growing Life Insurance Company in India. Tata AIG combines the strength and integrity of the Tata Group with AIG's international expertise and financial strength. delivering first class customer service.

These values continue to direct the group's growth and businesses. with honesty and transparency. 24 . the Tata group's early years were inspired by the spirit of nationalism. the Tata group's pioneering spirit continues to be showcased by companies like Tata Consultancy Services (TCS). With 219000 employees across 94 major companies. The Tata group has always sought to be a value-driven organization. first private sector power utility. Excellence: We must constantly strive to achieve the highest possible standards in our day to day work and in the quality of the goods and services we provide. compassion and humanity for our colleagues and customers around the world and always work for the benefit of India.4% of India's GDP). today Asia's largest software and services company. The five core TATA values underpinning the way we do business are:Integrity: We must conduct our business fairly. Everything we do must stand the test of public scrutiny. It is India's most respected private business group.4 billion (equivalent to 2. Founded by Jamsetji Tata in the 1860s. show respect. first luxury hotel chain and first international airline. UnderstandingWe must be caring. The Tata group pioneered several firsts in Indian industry: India's first private sector steel mill. the first car maker in a developing country to design and produce a car from the ground up. it is also India's largest employer in the private sector. In more recent times. and Tata Engineering. amongst others.HISTORY OF TATA GROUP The TATA group is India's best-known industrial group in the private sector with a turnover of around US $ 10.

the Tata Group aims to be the largest and most respected global brand from India whilst fulfilling its longstanding commitment to improving the quality of life of its stakeholders. nearly two-third of the equity of Tata sons. communities and environments in which we work. Tanishq. The trusts also give substantial annual grants and endowments to deserving individuals and institution in the areas of education. Responsibility: We must continue to be responsible. including Tata Indica. hospitals and scientific and cultural establishments. Westside and the largest addition. Taj(Hotels. Tata Tea. Business Sectors:The TATA Group operates business in seven key industry sectors. Tata Safari.Unity: We must work cohesively with our colleagues across the group and with our customers and partners around the world. the Tata Group's promoter company. The Tata Group's stable of brands also include many national and some internationally renowned product and service brands. The Tata Group has always believed in returning wealth to the society it serves. Resorts & Palaces). By combining ethical values with business acumen. globalization with national interests and core business with emerging ones. Tata Indicom. The table follows the group's sector wise financial performance. TATA companies in each of these sectors contribute to the overall makeup of the group. Tata Indigo. building strong relationships based on tolerance. Titen. is held by philanthropic trusts which have created a host of national institutes in community development. always ensuring that what comes from the people goes back to the people many times over. 25 . in percentage terms. The chart below illustrates how. healthcare and social upliftment. sensitive to the countries. Tata Sault. education and research centers. Thus. The Tata brand is recognized as the largest homegrown brand in India and the most respected brand across consumer segments. understanding and mutual cooperation. Voltas.

FAMILY TREE 26 .

Began with a textile mill in central India in the 1870s Sir Dorabji Tata Sir Dorabji Tata Trust (1932) Sir Ratan Tata 27 .Jamsetji Tata Founder of India's largest and internationally best known group of companies.

1993) Ratan N. 1974-The Central India Spinning. 28 . laying the foundation of the Tata Group. marking the Group's entry into textiles. Weaving and Manufacturing Company is set up.Jehangir Ratanji Dadabhoy Tata (1904 . Tata Group Chairman 1868: Jamsetji Nusserwanji Tata starts a private trading firm.

1907 –The Tata Iron and Steel Company (now Tata Steel) is established to set up India's first iron and steel plant in Jamshedpur. India's first luxury hotel. 1910-The first of the three Tata Electric Companies. is established. The plant started production in 1912. (now Tata Power) is set up. is established 1945:-Tata Engineering and Locomotive Company (renamed Tata Motors in 2003) is established to manufacture locomotive and engineering products. 1911-The Indian Institute of Science is established in Bangalore to serve as a centre for advanced learning. now the largest producer of soda ash in the country. well before such a system was implemented by law in much of the West. India's first Prime Minister. 1912:-Tata Steel introduces eight-hour working days. Tata Industries is created for the promotion and development of hi-tech industries 1954:-Jawaharlal Nehru. is established. with the Tata Oil Mills Company being established to make soaps.1902-The Indian Hotels Company is incorporated to set up the Taj Mahal Palace and Tower. engineering and manufacturing organisation. 29 . leading to the setting up of Lakme 1954:-India's major marketing. the Tata Hydro-Electric Power Supply Company. requests the Group to manufacture cosmetics in India. a division of Tata Sons. 1917:-The Tata enter the consumer goods industry. detergents and cooking oils. which opened in 1903. 1939:-Tata Chemicals. 1932:Tata Airlines. Voltas. opening up the aviation sector in India.

UK. is established as a division of Tata Sons. renamed Tata International. 1984:-Titan Industries – a joint venture between the Tata Group and the Tamil Nadu Industrial Development Corporation (TIDCO) – is set up to manufacture watches. statistical and techno-economic research and consultancy. is established. 1991:-Tata Motors rolls out its millionth vehicle. (The Group's insurance company. marketing. India's first software services company. 2000:-Tata Tea acquires the Tetley Group. was nationalised in 1956) The Tata Group Executive Office (GEO) is set up to design and implement change in the Tata Group and to provide long-term direction 30 . is one of the leading export houses in India 1968:-Tata Consultancy Services (TCS). Today the company. one of the largest tea producers. Tata Exports is established.1962:-Tata Finlay (now Tata Tea). 1970:-Tata McGraw-Hill Publishing Company is created to publish educational and technical books. Tata Economic Consultancy Services is set up to provide services in the field of industrial.) 1999:-The new Tata Group corporate mark and logo are launched. This is the first major acquisition of an international brand by an Indian business group. 2001:-Tata AIG – a joint venture between the Tata Group and American International Group Inc (AIG) – marks the Tata re-entry into insurance. New India Assurance. (The two-million mark was reached in 1998 and the third million in 2003.

the slimmest watch in the world Idea Cellular. the umbrella brand for telecom services from the Tata Teleservices stable. Bermuda TCS acquires Sydney-based Financial Network Services (FNS) Tata Motors passenger vehicle sales cross one-million mark TCS acquires leading BPO firm Comicrom in Chile The Indian Hotels Company acquires hotel run by Starwood. Landmark Tata Steel acquires stake in Carborough Down Coal Project.2 billion. making it one of the world's largest providers of submarine cable bandwidth Tata Sons completes 60 years of Tata operations in the US The Taj takes over management of The Pierre. starts operations 2003:-Tata Motors launches CityRover – Indicas fashioned for the European market. Sydney Tata Steel acquires Millennium Steel. and Australia VSNL* acquires Teleglobe International Holdings. 2003. Germany Trent acquires majority stake in India's largest. India's leading international telecommunications service provider Tata Consultancy Services (TCS) becomes the first Indian software company to cross one billion dollars in revenuesTitan launches Edge. NatSteel Asia VSNL* acquired Tyco Global Network. raising nearly $1. The first batch of CityRovers rolled out from the Tata Motors stable in Pune on September 16. Queensland. the Birla Group and AT&T. South Korea TCS goes public in July 2004 in the largest private sector initial public offering (IPO) in the Indian market.2002:-The Tata Group acquires a controlling stake in VSNL*. Tata Indicom. Thailand 31 . privately owned books and music retailer. 2005:-Tata Steel acquires Singapore-based steel company NatSteel by subscribing to 100 per cent equity of its subsidiary. is launched. NY Taco acquires Wundsch Weidinger. the cellular service born of a tie-up involving the Tata Group. 2004:-Tata Motors acquires the heavy vehicles unit of Daewoo Motors.

VSNL*.000th Ace within 20 months of the vehicle's initial launch Indian Hotels acquires Campton Place Hotel in San Francisco Tata Tea subsidiary. MCA-21 Tata Steel ranked world’s best steel maker for the third time by World Steel Dynamics Tata Coffee acquires US-based Eight O’clock Coffee Tatas join hands with Indigene Pharmaceuticals to build a global biopharmaceutical company Tata Sky satellite television service launched across the country Tata Steel begins construction of R670 million Ferrochrome plant in South Africa Tata Group acquires 30-per cent stake in Glacéau VSNL* rebrands SNO as Neotel in South Africa 2007:-Tata Refractories sets up Greenfield plant in China Tata Research Design and Development Centre celebrates silver jubilee Tata Steel acquires Corus TCS inaugurates TCS China — a joint venture with Chinese government and other partners Tata Steel acquires Rawmet Industries in Orissa Tata Steel. UK. 2006:-Tata Credit Card launched Foundation stone for the Tata Medical Centre unveiled in Kolkata TCS launches India’s largest e-governance initiative. through Neotel. the New York Stock Exchange. the second Group Company to do so after VSNL 32 . South Africa TCS sets up its first global delivery centre at Guadalajara in Mexico VSNL* rolls out wi-max services in India Tata Tea takes the No 1 position in terms of volume share in India in the packet tea segment Tata Motors is listed on the world's largest bourse. the Tetley group. through its subsidiary NatSteel Asia.Tata Chemicals acquires controlling stake in Brunner Mond Group. from Premium Foods. acquires controlling equity stake in two rolling mills located in Vietnam Tata Motors rolls out its 100. acquires Transtel Telecoms. signs an agreement to acquire the Vitax and Flosana trademarks in Poland.

2007 Tata Teleservices crosses the 1-million subscriber mark in Kolkata Tata Teleservices unveils the country's first full-fledged web-browser for mobile phones Tata Teleservices' subscriber base crosses the 20-million mark www. develops Eka.autojunction. announces its entry into the retail and institutional broking segment 33 .Tata Steel celebrates its centenary on August 26. at Bangalore Tata Sons unveils the Tata logo at the Nanjing Tata Auto Comp Systems plant in China Tata Sons announces the launch of Tata International Social Entrepreneurship Scheme for an international student internship programme with the Group’s community initiatives in India Indian Hotels Company invests 36 to 37 per cent in a newly floated company. Bhutan Tata Tea forays into the out-of-home beverage segment by unveiling its first outlet. BJETS. in partnership with Singapore-based Briley Group Tata Advanced Systems signs an MoU with Sikorsky Aircraft to manufacture S-92 helicopter cabins in India Tata Advanced Systems signs an MoU with Israel Aerospace Industries to establish a joint venture company in India to manufacture and support a wide range of defence and aerospace products Tata Securities. at the 9th Auto Expo in Delhi on January 10. the fourth fastest supercomputer in the world and the fastest supercomputer in Asia VSNL* is renamed as Tata Communications 2008:-Tata Motors unveils Tata Nano. 2008 Tata Projects acquires a majority stake of 75 per cent in Artson Engineering Tata Steel performs the groundbreaking ceremony for expanding its Jamshedpur capacity to 10 million tonne annually Indian Hotels' Taj Leisure Hotels launches Taj Tashi at Thimphu. Chai Unchai. a division of Tata Sons.in introduces auto e-retailing for the first time in India Tata Motors rolls out the one-millionth passenger car off the Indica platform Computational Research Laboratories. the wholly owned subsidiary of Tata Capital. the People’s Car.

The UK 34 . Inc. is launched worldwide TRF launches India’s first mobile stone crusher and screening plant Telco Construction Equipment Company acquires a 79-per cent controlling stake in Spain-based Serviplem SA E2E SerWiz Solutions is renamed as Tata Business Support Services Limited TCS announces the opening of its North America delivery centre called TCS Seven Hills Park Tata Motors enters into a definitive agreement with the Ford Motor Company for the purchase of Jaguar Land Rover INCAT enters into a joint venture with Hindustan Aeronautics Limited (HAL) to create INCAT-HAL Aerostructures Tata Teleservices (Maharashtra) crosses the 5-million subscribers mark during the month of March Tata Chemicals successfully completes the acquisition of General Chemical Industrial Products Inc in the USA Tata Coffee launches its first retail standalone outlet. in the country Tata Central Archives inaugurates its new website HISTORY OF AIG American International Group.Tata Communications. integrating the former VSNL and Teleglobe brands. Mr Bean Coffee Junction. (AIG) (NYSE: AIG) is a major American insurance corporation based in Wall Street in New York City.

2007. AIG's global businesses also include financial services. AIG member companies serve commercial. [4] AIG is also the principal sponsor of English football team Manchester United and the Japan Open Tennis Championships 35 . According to the 2008 Forbes Global 2000 list. 2004. financial products. In the United States. UK. as well as stock exchanges in Japan and Ireland (TYO: 8685. AIG also owns several of the largest U. AIG companies are the largest underwriters of commercial and industrial insurance and AIG American General is a top-ranked life insurer. with specialized investment management capabilities in equities. As of March 16. through these subsidiaries AIG runs asset management for the individual and institutional markets. market making and financial advice.headquarters are located on Fenchurch Street in London. It became a component of the Dow Jones Industrial Average on April 8. England. AIG Investments.S. AIG's financial service businesses include aircraft leasing. AIG's growing global consumer finance business is led in the United States by American General Finance. AIG is the 18th-largest company in the world. fixed income. retirement services businesses through AIG Retirement and AIG Sun America. European operations are based in La Defense. completed the purchase of 100% of the stock of P&O Ports North America from Dubai-based DP World. AIG is the world's leading international insurance and financial services organization. with operations in more than 130 countries and jurisdictions. institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. trading. a division of AIG. ISEQ: AIN). retirement services and asset management. Paris and its Asian HQ is in Hong Kong. and the largest network of independent broker-dealers through AIG Advisor Group. alternative investments and real estate AIG's common stock is listed on the New York Stock Exchange (NYSE: AIG.

The world’s leading international insurance and financial services organization • Operations in more than 130 countries and jurisdictions • AIG member companies serve commercial. institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer • AIG’s successful and growing global businesses also include financial services. retirement services and asset management. 1-Property 2-Casualty 3-Marine 4-Life 5-Financial Services 6-Asset Management AIG IN INDIA 36 .

AIG and its affiliate funds have invested approximately $450 m in private equity in India. And toll roads & bridges in the e infrastructure sector.AIG India. These direct investments have been made in telecommunication. prior to nationalization of the insurance sector.000 agents (January31. AIG has built a strong insurance organization in the country.AIG Systems Solutions (AIGSS 37 . AIG Companies also manage investment funds that have invested some $425m in Indian companies . Tata AIG. IT-enabled services etc Since 2001. established its presence in India in 1994. technology. and had offices n several Indian cities. AIG entered India in 1945. 2006). On opening up of the insurance sector to private insurance company's in2000.AIG recently established a software company in India . pharmaceuticals and retailing sector. with 1. AIG continues to look with interest for made direct investment opportunities in these sectors and in new emerging sectors like biotechnology. Besides. AIG and the Tata Group formed a Joint venture. the Indian arm of AIG.135 employees and over 36.Apart from insurance. investments have also been made in the manufacturing.

If such perils cab 38 . Fire. Assets are insured. Such possible occurrences are called perils. earthquakes. through accidental occurrences. because they are likely to be destroyed.1. breakdowns. floods. lightning. etc. are perils.

it cannot be insured against. Insurance is relevant only if there are uncertainties. different kinds of risks can be identified and separate groups made. but the time of death is uncertain. leadership of managers. etc. piracy. It only compensates the losses. Like this. If the loss is not financial. earthquakes. the time of earth is not uncertain. People who are exposed to the same risks come together and agree that. The peril can sometimes be avoided. hailstorms. lightning. 4. may be a few lakhs or a few crores of rupees. The damage may or may not happen. There has to be an uncertainty about the risk. Only economic consequences can be insured. Insurance only tries to reduce the impact of the risk on the owner of the asset and those who depend on that asset. The risk only means that there is a possibility of loss or damage. the heavy loss that any one of them may suffer (all of them may such losses 39 . including those exposed to such risks. He cannot be insured. In the case of a person who is terminally ill. we say that the asset is exposed to that risk. but they are exposed to different kinds of risks like. fire. if any one of them suffers a loss. If there is no uncertainty about the occurrence of an event.case damage it the asset. By this method. etc. the others will share the loss and make good to the person who lost. because of the peril of an earthquake. innovative and creative abilities. death is certain. The risk to an owner of a building. It does not prevent its loss due to the peril. Insurance does not protect the asset. In the case of a human being. ship sinking. through better safety and damage control management. All people who send goods by ship are exposed to these risks.and that too. insurance may not be possible. sentimental attachments to family heirlooms. Insurance is done against the contingence that it may happen. The mechanism of insurance is very simple. Examples of non-economic losses are love and affection of parents. which are related to water damage. not fully. Risks are the consequential losses or damages. depending on the cost of the building and the contents in it. 2. though not exactly known. Perils are the events. etc5. burglary. 3. Those owning factors are not exposed to these risks. The peril cannot be avoided through insurance.

The second is that the peril should occur in an accidental manner. In other words. In other words. It will become bearable when the community shares the burden. There are certain principles. If 100 airline companies flying Jumbo Jets. Insurance as a security Tools 40 . and not the deliberate creation of the insured person. It is unlikely that many Jumbo Jets will crash at the same time. come together into an insurance pool. If a Jumbo Jet with more than 350 passenger's crashes. whenever one of the Jumbo Jets in the pool crashes.at the same time) is divided into bearable small losses by all. the loss would run into crores of rupees. accidental. 6. which make it possible for insurance to remain a fair arrangement. Thus. Nobody should be in a position to make the risk happen. No airline would be able to bear such a loss. This would be taking unfair advantage of an arrangement put into place to protect people from the risks they are exposed to. The first is that it is difficult for any one individual to bear the consequences of the risks that he is exposed to. insurance is a business of "haring". the loss to be borne by each airline would come down to a few lakhs of rupees. none in the group should set fire to his assets and ask others to share the costs of damage. 7. the risk is spread among the community and the likely big impact on one is reduced to smaller manageable impacts on all. The occurrence has to be random.

including food. which can be used in security this aim. The lower strata create a cost on society. sickness. provisions of security are largely left to the individuals." When the bread winner dies. unless other arrangements come into being to restore the situation. social security finds a place in our constitution. Insurance is one of them. Poor people also cost by way of larger growth in population. In the capitalistic society. Life insurance provides if this did not happen. sickness. to that extent. The society provides instruments. housing and medical care and necessary social services and the right to security the event of unemployment. the family's income dies. there is a tendency to provide some social security by the state under some schemes. widowhood or other lack of livelihood in circumstances beyond the control. and disablement and in other cases of undeserved want. poor education and vagaries in behavior of children. to education and to provide public assistance incase of unemployment. to make effective provisions for security right to work. where members are required to contribute e. Social Security Schemes in U. Part of the state's obligations to the poorer sections is met through the mechanism of life insurance Life Insurance V/s Other Savings 41 . Poor people cost the nation by way of subsidies and doles and so on. The economic condition of the family is affected. clothing. another family would be pushed into the lower strata creates a cost on society. Life insurance tends to reduce such costs. Article 41 requires state. Under a socialistic system the responsibility of full security would be placed upon the state to find resources for providing social security. In this sense life insurance business is complementary to the state's efforts in social management. within the limits of its economic capacity and development.g. old age. In India.The United Nations Declaration of human Rights 1948 provides that "Everyone has a right to a standard of living adequate for the health and wellbeing of himself and his family.K. disability. In a capitalistic society too.

42 . The Salary Saving Scheme is ideal for any institution or establishment subject to specified terms and conditions. It allows long-term savings since payments can be made effortlessly because of the 'easy installment' facility built into the scheme. Besides. Also. (Premium payment for insurance is either monthly. only the amount saved (with interest) is payable Aid to Thrift: Life insurance encourages 'thrift'. In this case the employer directly pays the deducted premium to LIC. Any misrepresentation. Liquidity: In case of insurance. which applies to all forms of insurance. At the time of taking a policy.Contract of Insurance: A contract of insurance is a contract of utmost good faith technically known as uberrima fides. in case of demise. nondisclosure or fraud in any document leading to the acceptance of the risk would render the insurance contract null and void. policyholder should ensure that all questions in the proposal form are correctly answered. it is easy to acquire loans on the sole security of any policy that has acquired loan value. For example: The Salary Saving Scheme popularly known as SSS provides a convenient method of paying premium each month by deduction from one's salary. half yearly or yearly). a life insurance policy is also generally accepted as security. The doctrine of disclosing all material facts is embodied in this important principle. quarterly. life insurance assures payment of the entire amount assured (with bonuses wherever applicable) whereas in other savings schemes. Protection: Savings through life insurance guarantee full protection against risk of death of the saver. even for a commercial loan.

Also. Money When You Need It: A policy that has a suitable insurance plan or a combination of different plans can be effectively used to meet certain monetary needs that may arise from time-to-time. Children's education. Alternatively.Tax Relief: Life Insurance is the best way to enjoy tax deductions on income tax and wealth tax. purchase of a house or for other investments. These plans have two basic elements. start-in-life or marriage provision or even periodical needs for cash over a stretch of time can be less stressful with the help of these policies. loans are granted to policyholders for house building or for purchase of flats (subject to certain conditions). Assesses can also avail of provisions in the law for tax relief. One is the death cover providing for the benefit being paid on the death of the insured person within a specified 43 . policy money can be made available at the time of one's retirement from service and used for any specific purpose. About traditional plans Traditional life insurance plans are usually referred to as ‘plans’ of insurance. such as. In such cases the assured in effect pays a lower premium for insurance than otherwise. This is available for amounts paid by way of premium for life insurance subject to income tax rates in force.

TERM ASSURANCE PLAN:- Plans of insurance that provides only death cover are called “TREM ASSURANCE PLAN”. 1.PURE ENDOWMENT PLAN:- Those are provides only survival benefit are called “PURE ENDOWMENT PLAN”.period. but if the insured die with in the specified period company will pay death claim. If the insured does not die with in the specified period. All traditional plans are combination of these two basic plan. no payment is made under a term assurance plan. 44 . then company will pay sum assured+bonus. The other ‘survival benefit’ providing for the benefit paid on survival of specified period. but if the insured die with in the specified period company will pay death claim. If the insured does not die within the specified period. 2.

Some Traditional Plans Or Term Plans Of Tata AIG RAKSHA (Pure Protection Plan) 45 .

Target audience:Aged between 18 and 50 year • Wanting to there loved ones from the financial consequence of an unfortunate event • Wanting to option of a flexible and convertible plan, should they want to include a savings element in it? Product features:•

Raksha is a Tata AIG life’s cast effective plan. It helps provides financial protection to the family. In case of death of insured, the sum assured is paid to the nominees. 1- Four term to choose from: Raksha is available in 4 terms- 10, 15, 20, and 25 2- Convertibility: This plan has an option to include a saving element into it. I can be converted into any of Tata AIG life’s select endowment plan. Product snapshot: Term Entry age Raksha-10 18-50 Raksha-15 18-45 Rs. 500,000 Rs.2,000 Raksha-20 18-40 Rs. 500,000 Rs.2,000 Raksha-25 18-35 Rs. 500,000 Rs.2,000

Minimum Rs. 500,000 Sum assured Minimum Rs.2,000 annual premium

Payment mode: MONTHLY, QUATERLY, SEMI ANNUAL, ANNUAL Guaranteed benefit: sum assured payable on death

RIDERS
46

• RIDERS are very cost effective method to enhance the cover of a basic policy. • A riders is normally operational for the of the basic policy or lesser but never more then the basic policy term • When the basic policy is cancelled, the riders are also cancelled. • Rider do not pay maturity benefits • The riders amount is called the Riders sum assured. • Rider premiums are charged separately (not through cancellation of units). • Premium payment method will be as per the basic policy. • Riders continue while the policy is on PH. Rider premiums must be paid to keep the riders in force during PH. • Existing policyholders can attach riders on policy anniversary. Riders provide 5 additional benefits to the policy holder:• •

• • • •

Accidental Death Benefit(ADB) Accidental & Death & Dismemberment (ADD)(Long Scale) Critical Illness (lumpsum benefit) Waiver of Premium Payor Benefit Term rider

Accidental Death Benefit (ADB) (Increase your risk protection at a very minimal cost) • In case of accidental death, the benefits payable are: Basic SA (less cumulative partial withdrawals) or Fund Value, whichever is higher PLUS the ADB Sum Assured
47

Accidental Death & Dismemberment (ADDL) • In case of death resulting from an accident the benefits payable are: Basic SA (less cumulative partial withdrawals) or Fund Value, whichever is higher PLUS ADDL Sum Assured • In case of disability the ADDL SA will depend on the degree of loss suffered. Note- ADB and ADDL cannot be added together Double Indemnity • In case of death occurs due to accident while traveling as a fare paying passenger: Double the Rider Sum Assured Critical Illness (CI) Rider SA payable under 6 critical Illnesses/Surgeries covered:1) 2) 3) 4) 5) 6) Cancer Stroke Heart Attack Coronary Bypass Graft Surgery Kidney Failure Major Organ Transplant

Waiver of Premium • Helps cover disability of the insured

48

• If the insured is totally and permanently disabled. but can never more than the SA of the basic policy. • The waiver of premiums (WOP) rider waivers of all the future unpaid premiums if the insured is totally and permanently disabled.25or until age 60 year • The term rider can be lesser than or equal to the length of term of the basic policy.10.20.15. but can never more than it. • The term rider sum assured can be lesser than or equal to the SA of the basic policy. it is likely that he will not be able to pay future premiums and policy may laps. • The minimum sum assured for a term rider is Rs 1 lakh. Term rider • Providing additional death benefit ( pays lumpsum amount on death) • Policy term 5. NIRVANA PLUS (Retirement Policy) 49 .

50 .Annuity PLUS lumpsum at maturity: On maturity the sum assured + Bonuses+guranteed additional help gives a large lumpsum . You pay a premium during your working life. The balance amount can be used to purchase an annuity of your choice for giving you life long pension payment.guaranteed reversionary bonuses are added from the 6th policy anniversary onwards.58and 60 year. hassle free life and independent retire life. Product feature: Nirvana plus is Tata AIG life’s retirement plan.33% of this amount can be commuted tax free for meeting urgent expenses. an amount of Rs. the nominee gets double sum assured – the rider sum assured and basic sum assured PUSS the accrued bonuses 5. 000 will be paid for treatment. The plan also has an accidental death benefit inbuilt.Guaranteed Additional: Guaranteed Addition of 2%* of the Sum assured in the First year and Guaranteed Addition of 10%* of SA every 5 years through out the premium paying term. This helps your maturity value to grow. If you get diagnosed with a covered critical illness and survive for a period of 30 days post diagnosis.Target audience: • Aged between 18 year and 45 year • Wanting a lump sum and regular pension after retirement. In case of accidental death.Bonuses: Non.Choose your retirement age: The plan lets you choose from amongst three retirement ages 55. 2. A terminal bonus is added once the policy has been inforce for 10 year these bonuses helps money in compounding faster. 4-Additional benefit: The plan has a critical illness rider inbuilt for first 3 year. 1. with a premium payment term of 15 year. 3. It helps you in ensuring a comfortable.100.

200.2000 18 year-45 year Rs.Product snapshot: Entry age Sum assured Minimum premium 18 year-40 year Rs.000 18 year-43 year Rs.YLY.2000 Payment mode. QLY. HLY. MLY Tax benefit u/s-80CCC & section 10(10D 51 .400.2000 annual Rs.100.000 Rs.000 Rs.

MAHALIFE GOLD (Whole Life Plan) Target audience: 1. but want to pay premium for a limited term.Required money at regular interval. You would have heard of Life Insurance Policies that give you cover till you retire and you got to pay for it till you retire. The plan only also allows the insured to take advantage of higher market interest rates through cash dividend. The coverage is available for a premium payment term of 15 year only.Aged between 30 days and 60 years next birthday 2. 4. the death cover will be passed on to your Grandchildren 52 . It provides coverage till age 100 and gives regular income for life. What if I give you a plan that covers you for your life time & you have to pay for only 15 years? This is a very unique Plan in which 3 generations of your family can benefit.Wanting to create a legacy for future generation. Mahalife Gold ensures that you are secured with regular income available for you through out your life. This can be used for taking care of your house hold expenses / Loans / Retirement OR you can treat this as regular funds available to you for a Systematic Investment which will give you further appreciation. On his death. you get the benefit of Tax deductions while your son enjoys guaranteed returns (survival benefit) through out his life. 3. When you take Mahalife Gold for your son.Cover for life. Product feature & Benefits Mahalife gold is Tata AIG life’s premium whole life plan.

which depend on the performance of the company. HLY. b. the full sum assured will be paid to the nominees.50. 2-Limited premium payment term: The insured has to pay premiums only for 15 year 3-Yearly coupon payment: a. 0000 No limit YLY. the insured start getting non-guaranteed cash dividend.1-Whole life cover: The plan provides coverage till age 100. MLY Tax benefit u/s-80C and the payouts are tax free u/s – 10(10D) Unit Linked Insurance Plan 53 .From the 6th policy anniversary onwards. QLY.Tax benefit u/s-80C and the payouts are tax free u/s – 10(10D) Product snapshot: Entry age 60 year Minimum sum assured Maximum sum assured Payment mode 0(30 days) to Rs.From the 10th policy anniversary onwards. the insured gets guaranteed annual coupon payment of 5% of the face value 4. In case of death at any time.

As times progressed the plans were also successfully mapped along with life insurance need to retirement planning.(ULIPs) (Protection + Wealth Creation under a Single Plan A policy. financial planning for children’s future and retirement planning ULIP distinguishes itself through the multiple benefits that it provides to the consumer. ULIP provides solutions for insurance planning. The plan is a one-stop solution providing: 54 . ULIP came into play in the 1960s and became very popular in Western Europe and Americas. which provides for life insurance where the policy value at any time varies according to the value of the underlying assets at the time. The investment is denoted as units and is represented by the value that it has attained called as Net Asset Value (NAV). financial needs. In another word we can say that a ULIP is a life insurance policy which provides a combination of life insurance protection and investment. The reason that is attributed to the wide spread popularity of ULIP is because of the transparency and the flexibility which it offers. LIP is life insurance solution that provides for the benefits of protection and flexibility in investment. In today’s times.

but there may be a loyalty bonus paid at the end 55 . some de insurer.charge a redemption fee in such cases  Theses policies will not be entitled to any bonus  There is no annual bonus . Sometimes there are conditions attached.• • • • • • • • • • • • • 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 planning Some of the other features offered by insurer along with ULIPs are the following.  The policyholder can pay additional premium for investment at any time  Partial or total withdrawal is allowed. not all .

some company 80% in equity market.HOW ULIPS MANAGES MONEY Unit linked insurance plan have become much sought after by individuals who want to buy life insurance. government securities. Balanced fund are ideal for individual who are apprehensive of taking 3-Capital guaranteed fund:A few insurance company also offer ULIPs with a capital guarantee the return atleast the premium that have been paid over the policy is tenure should the fund value fall lower than the premium paid capital guarantee. bonds. may differ slightly across various life insurance companies. ULIPs OPTION:Broadly speaking. 56 . 2. 1-Aggressive / Growth fund 2-Balanced fund 3-Capital guaranteed fund 4.Balanced fund:A balanced fund invests the premium money in a portfolio. through largely the same.. The Investment mandate. Some company invests 100% in equity market. which consists of both equity as well as debt instrument in varying portfolios. most life insurance companies offer individuals 4 potion to choose from…. ULIPs are different from traditional plan in the sense that they invest the premiums money in the market linked instrument primarily in stock.Debt fund 1-Aggressive / Growth fund:Such fund investment in major portion of the premium in the equity market.

57 .The safety of the capital guarantee stems from the fact that 70% of the premium more money is invested in relatively safe debt instrument when moderate the risk of investing in stocks but might lower potential returns.Debt fund:These types of fund invest in debt instrument like government bond and AAArated securities. 4. Such fund are low risk in nature when company to their equity / balanced counterparts. The return through tend to be lower and steadier than the equity balanced fund.

However there are quite a few differences between these policies. We take a look at how both these policies differ Unit link insurance plan: Unit link insurance plan or ULIP is the most widely promoted type of insurance plan. When you pay a premium. Two such widely promoted types of insurance policies are unit link insurance plan and whole life insurance plan. In the initial years. Also many advisors mis-sold these plans by telling that there is no need to keep on paying the premium for the duration of the plan.Comparison Of Unit Link Insurance Plan And Whole Life Insurance Talk to any insurance advisor and you are bound to be bombarded by hordes of different kinds of insurance policies. a major part of the premium goes towards buying an insurance cover and remaining portion is invested. just three years would suffice. Though conceptually this is correct. You can also switch between funds if the market condition or your personal circumstance changes. your life cover will cease and you'll have to buy a new policy 58 . you can choose appropriate fund(s). So if there is no sufficient amount in your account to pay these charges. fund will keep on debiting its charges from the amount invested. However the drawback of unit link insurance plan is the high charges. you are given an insurance cover and part of premium is invested in the fund of your choice. balanced which contains a mixture of debt and equity in varied proportion and pure debt. Is it any surprise that a normal person gets confused when choosing a right insurance policy for his needs? Advisors take advantage of this buyer's ignorance and promote those policies that fetch them the highest returns. Most unit link plans offer choice of 3 funds: pure equity. Depending on your risk appetite as well as market scenario.

1. However unlike ULIP. Also their charges are not transparent.  How much will he need to save?  Investment Amount Rs.45 Rs.000 Rs.33.19.11.819.10% Returns Rs.57 Rs. This means when buying a whole life insurance you have to keep on paying premiums till the end.000 Rs.000 Rs.000 Years 30 25 20 15 10 Expected Return -10% 10% 10% 10% 10% 10% Corpus. How it works Assume a person needs 25 Lakhs for a comfortable retired life (after inflation).25. a whole life insurance plan does not give you flexibility of investing as per your risk profile.60.419. In addition.25.91 Rs.25.99 Rs. Due to this drawback. you can use this money as pension for old age.000 Rs.25.075.25. you start getting 5% of sum assured from sixth year onwards along with bonuses accrued. Once 12 years are over.25.Whole life insurance: A whole life insurance policy is an insurance policy that provides you with insurance cover for as long as you live or 100 years.00 59 . To combat this Tata AIG has introduced its Mahalife Gold where you need to pay premiums just for 12 years while the life cover continues till your death.072. this plan lost out to ULIP.267. whichever is earlier.

54.25.95 Rs.25.427.73 ADVANTAGE OF ULIPs 60 .25.44 Rs.25.000 Rs.37.238.10% Returns Rs.000 Rs.074.000 Years 30 25 20 15 10 Expected Return -6% 6% 6% 6% 6% 6% Corpus.000 Rs.25.25.98 Rs.87.57.Investment Amount Rs.768.427.1.73 Rs.000 Rs.

In ULIPs. the offer bid spread. 12-In ULIPs.ULIPs the premium is invested in a fund decided by the insurer. 10-In ULIPs. 14-In ULIPs the SA must not be less than 5 times the annualized premium. the death benefit may be “integrated” 23-In ULIPs.In ULIPs. 16.In ULIPs one can be pay additional premium in any year for investment.In ULIPs the policy holder is responsible for the benefit under the policy. 17.In ULIPs the rider will be based on the basic SA and not NAVs 21-In ULIPs. will in some cases be zero. partial withdrawal are permitted periodically.In ULIPs. the death benefit will be the basic SA only 22. the offer bid spread is the difference between the two prices. 13-In ULIPs. 7-In ULIPs. the premium will be invested as pre the offer price. 6-The NET ASSETS VALUE (NAV) of all the funds of all the insurers will vary.1-ULIPS provide for flexibility. 61 . the lock in period will apply. 15. 9-In ULIPs. 11-In ULIPs. the premium to be invested in the fund can be increase in any year. the NAV are published regularly. a policy holder can switch between funds at any time. riders can be availed of 20. the NAV of a fund can be less than purchase price. 25-Compounding is “Interest earned on Interest” 26-Interest that is earned by the initial capital also earns interest and hence multiplying the rate at which money grow.In ULIPS the insurance cover must be a minimum multiple of the premium 3-ULIPS can not issued as participating policies 4-Loan are not given under ULIPS 5.In ULIPs. 8-In ULIPs. if the additional premium is paid any year 19. 24-ULIPs harness the “Power of Compounding” to grow the value of the investment. 2. the SA must not be less than 1. 18.25 times the single premium.

Switching fund means moving money from one fund to another fund.Equity fund 2. This is allowed only at least 3 annual 62 . There are 4 free fund switching allowed in a policy year 4-Partial withdrawal: This policy allow to partial withdrawal a part of your fund value to meet urgent expenses.Wanting to create wealth for a future event Product feature: Invest assure II is a unit linked endowment plan from Tata AIG life. This is a plan that lets you harness the market to create wealth over a long term. which cater to the risk averse as well as those willing to take risks for a chance of greater returns 1.Policy term: this plan lets you select from three policy term according to the investment horizon 1-15 year 2-20 year 3-30 year 2-Five funds: This plan offers 5 different types of funds.Income fund 5.aged between 0(30days) and 60 years 2.Stable growth fund 4.Short term fixed income fund 3-Fund switching: This plan lets you switch from one fund to another.SOME UNIT LINKED INSURANCE PLANS OF TATA AIG 1) Invest Assure II Target audience: 1.Aggressive growth fund 3. 1.

Top-up can be made up to 4 times a year.Deductible partial withdrawal are higher of I. The minimum amount of patria withdrawal is Rs 10.Higher of the sum assured less deductible partial withdrawal or regular premium fund value. you can put the policy on premiums holidays after paying at least 3 annual premiums. Premiums holidays can continue for a maximum of 5 years at a stretch.In additional to this higher of top-up sum assured less deductible partial withdrawal or top-up fund value.All partial withdrawal made after attaining age 60. if any will also be paid c. 5.25 and the maximum is 5.000. 7. If the top-up exceed 25% of the total premiums paid.000.Death benefit: In case of death of insured the death benefit payable is as follows: a.Premiums holidays: in case you find that you are unable to pay premiums.Partial withdrawal made 24 month preceding death and II. The minimum sum assured multiple for top-up is 1. it is mandatory to take a top-up from the amount that exceeds 25%. You can resume paying the premiums at the later date. You can increase insurance coverage via top-up.premiums have been paid. The premiums top-up is Rs 25. This help the fund value go faster. 63 . The policy does not lapse and continued to grow to market conditions. 6-Top-up: You can invest additional amount of money via top-up. b.

Product snapshot: Term Entry age 15 year term 0(30days)-60 20 year term 0(30days)-55 75 Rs. QLY.000 30 year term 0(30days)-45 75 Rs.12.12. MLY Tax benefit u/s-80C and the payouts are tax free u/s – 10(10D) 2) Invest Assure Gold 64 .12.000 Maximum 75 maturity age Minimum annual Rs.000 premium • • Payment modeYLY. HLY.

Income fund 5.5 funds: This plan offers 5 different types of funds.Stable growth fund 4. Switching fund means moving money from one fund to another fund. This is a plan that lets you harness the market to create wealth over a long term.Mid cap Equity fund 2. Whole of life premiums payment term 2. There are 4 free fund switching allowed in a policy year 4.(Whole Life Unit Linked Plan) Target audience: • Aged between 0(30 days) and 70 year • Wanting to create wealth for future generation. The minimum amount of patria withdrawal is Rs 10. 65 . Product feature: Invest assure gold is a unit linked whole of life plan from Tata AIG life. 1-premium payment term: A.Aggressive growth fund 3.Partial withdrawal: This policy allow to partial withdrawal a part of your fund value to meet urgent expenses.000. 5 year premiums payment term B.Short term fixed income fund 3-Fund Switching: This plan lets you switch from another. This is allowed only at least 3 annual premiums have been paid. which cater to the risk averse as well as those willing to take risks for a chance of greater returns 1.

Premiums holidays: In case you find that you are unable to pay premiums. You can increase insurance coverage via top-up.5. The minimum sum assured multiple for top-up is 1. if any will also be paid c. the maturity can be taken in period of time. you can put the policy on premiums holidays after paying atleast 3 annual premiums. The settlement period should not be exceed 5year from the maturity date. I. 66 . 8-Guaranteed additional: After every 5 policy year.25% of units under the regular premiums account.The value of these payments will depend on the performance of the chosen fund.All partial withdrawal made after attaining age 60. additional units know as loyalty additional will be allocated to the policyholder.000. III. The charge for premium holiday would be 4% of regular premiums and this charge will continue for Premium payment term or the 5th policy anniversary only. 7-Death benefit: In case of death of insured the death benefit payable is as follows: a. it is mandatory to take a top-up from the amount that exceeds 25%. 6. provides the policy is inforce at the time.Deductible partial withdrawal are higher of I. This help the fund value go faster.Partial withdrawal made 24 month preceding death and II. This period over which the settlement is selected is called the “SETTEMENT PERIOD”.Higher of the sum assured less deductible partial withdrawal or regular premium fund value.25 and the maximum is 5. Top-up can be made up to 4 times a year. The premiums top-up is Rs 25. If the top-up exceed 25% of the total premiums paid.Settlement option: On maturity.Top-up: Top-up: You can invest additional amount of money via top-up. The policy does not lapse and continued to grow to market conditions. 9. You can resume paying the premiums within 2 years. b.In additional to this higher of top-up sum assured less deductible partial withdrawal or top-up fund value. Units would be equivalent to 0. II.

000 YLY. QLY.5)* Annual premiums Rs. MLY Minimum premium Payment mode 67 . 2-(70 age at entry)*(0. 50.Product snapshot: Entry age 70 year Minimum sum Assured 0(30 days) 1-5*Annual premium. HLY.

4 policy term: This plan lets you choose from the amongst 4 term-15. depending on your investment horizon. This acts as a guarantee in case of death.Single premium: This policy require you to pay premium only and you get coverage for the entire chosen policy term 2. You can take a top up sum assured for the top up made.10. It helps you harness the power of the market with the convenience of one single premiums payment. The sum assured is mandatory if the cumulative top up premium exceeds 25% of the single premium. You can invest windfall gains to help your fund has not had a chance to grow when an unfortunate event happens. This is allowed only at least 3 annual premiums have been paid. 20. 5-Sum assured: This plan gives you a life insurance cover for the chosen term. 4-Top-up: You can invest additional amount of money via top-up. for the amount that exceeds 25%. 6-Top-up sum assured: you can use top-up to increase your level of coverage. if your fund has not had a chance to grow when an unfortunate event happens.INVEST ASSURE PLUS (Unit linked insurance plan) Target audience: • Aged between 0(30days) and 70 year. 68 . The minimum amount of patria withdrawal is Rs 10. 25.30. 000. • Wanting tax benefit and a life cover • Wanting to create wealth for future generation Product feature: Invest assure plus is Tata AIG life’s single premium unit linked insurance plan. 1.000 and the fund value after such withdrawal should be atleast Rs. 3-Partial withdrawal: This policy allow to partial withdrawal a part of your fund value to meet urgent expenses.

50 year 30 year 0.Stable growth fund 4.Death benefits: The death benefit payable will be the initial sum assured (ISA) less cumulative Net partial withdrawal or the single premium account value (AV). which cater to the risk averse as well as those willing to take risks for a chance of greater returns 1. 25.Partial withdrawal made 2 years preceding date of death of insured or b.45year Entry age . Switching fund means moving money from one fund to another fund.Short term fixed income fund 9-Fund Switching: This plan lets you switch from one fund to another.0. There are 4 free fund switching allowed in a policy year Product snapshot: Term 15 year 20 year 0. whichever is higher When partial withdrawals have been made the sum assured will be reduced by HIGHER of: a.Equity fund 2.Income fund 5.Partial withdrawal made after attainment age 60 of the policyholder 8-5 fund: This plan offers 5 different types of funds.25 times the premium – 25 times the premium Minimum .Rs.Aggressive growth fund 3.60 year Sum assured -1.7.55 year 25 year 0.000 Premium Single premium Payment made 69 .

70 .and will be allowed a four times a year. Policy Term: Choose any term between 5 & 40 1-Payment Term: Choose 3 years. multiples of 5 years or the policy term 2-Investment Funds: Choose from 7 different funds 1. You can take a top up sum assured for the top up made.Stable growth fund 4. 12 times a year with no charge.Income fund 5. This is a plan that lets you harness the market to create wealth over a long term.Aggressive growth fund 3. You can invest windfall gains to help your fund has not had a chance to grow when an unfortunate event happens. Switching fund means moving money from one fund to another fund.Equity fund 2. 4-Top-up sum assured: you can use top-up to increase your level of coverage. for the amount that exceeds 25%. Choose to switch your funds at any time. The sum assured is mandatory if the cumulative top up premium exceeds 25% of the single premium. • Wanting tax benefit and a life cover • Wanting to create wealth for future generation Product feature: Invest assure gold is a unit linked whole of life plan from Tata AIG life. 5-Switching: This plan lets you switch from one fund to another. Min single top –up premium is Rs 5000/.Short term fixed income fund 3-Top-ups: You can invest additional amount of money via top-up.Invest Assure Flexi (Unit linked insurance plan) Target audience: • Aged between 0(30days) and 70 year.

the death benefit will be the FUND VALUE. II. The settlement period should not be exceed 5year from the maturity date. the maturity can be taken in period of time. 71 . III.The value of these payments will depend on the performance of the chosen fund.During the period. IV.6-Settlement option: On maturity. This period over which the settlement is selected is called the “SETTEMENT PERIOD”. I. 7-Premium Redirection: Choose to redirect your future premiums to any other funds in any proportion! Product snapshot: Policy term Minimum issue age Maximum issue age Maximum age of maturity Minimum premium Sum assured Premium mode Premium Payment Period Benefit Period 5-40 year 0(30 days) 70 year 80 year 15.ooo 5 x Annual Premium or Term/2 x Annual Premium whichever is higher Annual/Semi-annual/Quarterly/Monthly 3 Years/ Multiples of 5 Years/ Equal to policy term For the entire term of policy.

SURVEY As a part of our project. To analyze which set of customers should invest in ULIP and Traditional plan as per their needs identified. To know the potential customers for the investment schemes: ULIP and Traditional plan. To know the popularity and acceptability of the two products i. a survey was being conducted by us in Bareilly region. OBJECTIVE OF THE SURVEY: To know the existing investment pattern among different age groups and different occupations. 72 . ULIP and TRADITIONAL PLAN among the above mentioned categories.e. in order to know the perceptions of the investors about the investment schemes basically ULIP and TRADITIONAL PLAN.

Moreover. it helped us to give suggestions to the company so as to cater customers’ needs in a much better way and hence broaden its customer base. The primary data was obtained through observation.ended and multiple choice questions. The questionnaire was equally important both to the customers as well as to the company to draw out its prospects. it is seriously undertaken that anyone who is undergoing the process. The questionnaire was designed to meet all the objectives of the survey fully and helped us in knowing the needs of the customers and the market value and image of the company . direct communication with the people and filling up of questionnaires. Both primary and secondary data has been used in order to analyze these products. The secondary data was collected through the Internet Journals and newspapers DATA COLLECTION INSTRUMENT A semi structured kind of questionnaire was designed which contained both open. The questionnaire designed was to provide dual information sharing type. 73 .DATA COLLECTION METHOD The basic objective of the project was to compare investment behavior especially in ULIP and Traditional plan. should find his interest or else he might show disinterest towards the programmed.

The audience were targeted and analyzed basically on the basis of two important parameters: Age and Occupations. Results were viewed cautiously as sample was from a specific population. Demographical information was also taken in order to know the investment patterns according to the location. as the numbers itself cannot explain the true picture. gender etc.RESEARCH METHODOLOGY The survey process involved two phases: First phase included identification and selection of the target audience to be studied and to determine the parameters on which respondents will justify their preferences. The responses that were generated during this exercise were converted in the form of percentages to have a comparative outlook. In the second phase data was collected through questionnaire from more than 100 respondents within Bareilly region. These percentages were then represented through the simple tools like bar graphs. age. pie charts. FINDINGS:74 . A questionnaire was designed to collect the needed information from the respondents.

Interpretation: Analysis are done on the basis of AGE AGE The analysis was also done on the basis of age which was being broadly classified into 4 categories: 18-25 years 25-35 years 35-45 years 45 and above 75 . either proprietorship or partnership.OCCUPATION To begin with the nature of occupation was divided broadly into 2 categories: Business Services The study shows: Almost 80% of people were into service and 20% were into business.

GRAPHICAL REPRESENTATION: Question1:. the group which we address mostly as middle class population of India.In which income group mostly people fall? Income (Lac) Above 5 b/w 2-5 below 2 As a % of total 25 58 17 INCOME 17% 25% above5 B/w 2-5 Below 2 58% Most of the people fall in the income group between 2 to 5 lakh. 76 .

Question2:-How much people are life insured? Life Insurance Cover Yes No As a % of total 42 58 LIFE INSURANCE COVER 42% 58% Yes No In India most of the people are not aware about the insurance. And we can say in India there are a big segment to target the people. as well as there benefits and security of life. 77 .

most of the people are come under for paying Tax so for taking reveal from the Tax so most of the people are doing investment. 78 .Question3:-How many people are willing to invest? I Yes No As a % of total 54 46 I VS O N T N ET R O 4% 6 5% 4 Ys e N o Now a days.

7647059 REAS ONSFOR INVES TMENTS Asset Purchase 12% 18% 24% 46% Building Cash Reserves Retirem ent Others In India people are of different culture and as well as different nature so reason of investment may also be different.What would be the reason for investment? Reasons for Investment Asset Purchase Building Cash Reserves Retirement Others As a % of total 47. 79 .6470588 11.Question4:.0588235 23.5294118 17.

4827586 17. because there is a statement are true that is “ HIGHER RISK WITH HIGHER RETURN” Question6:-If you want to invest in ULIP Plan in which company you would be preferred? 80 . question it basically depend on the mentality of people are different .3448276 PORTFOLIO 10% 24% 14% 17% Traditional plan Fixed Deposits ULIP Share markets Others 35% In this.Question5:-For the investment which plan would be more preferable? PORTFOLIO Traditional Plan Fixed Deposits ULIP Share markets Others As a % of total 34.7931034 24.137931 10.2413793 13.

Queation7:-If you want to invest in Traditional Plan to whom you give the preference? 81 . for the ULIP scheme most the people give same preference to both the sector it may be govt. as well as private sector because the money of ULIP plan will be invested in market.ULIP Scheme ICICI LIC TATA AIG LIFE As a % of total 25 25 50 ULIP SCHEME ICICI 25% Tata AIG 50% Tata AIG LIFE LIC ICICI LIC 25% In this statement.

Traditional plan co. Franklin ICICI TATA AIG LIFE Reliance Others As a % of total 25 12. Question8:.In which fund you want to invest? Type of Fund As a % of Total 82 . Because both the sector would be give same returns.5 25 25 Traditional plan Others 25% Reliance 25% Franklin 24% ICICI 13% Franklin ICICI TATA AIG LIFE TATA AIG LIFE Reliance Others 13% In this statement. for choosing the traditional plan both the sector are eligible.5 12.

9047619 14. ULIP Plan is invested in market so people have the choice it may be invested in: Equity fund Debenture Bond In these fund as per the choice of people it may select the unto there choice. ANNEXURES Name: ______________ Contact No.2857143 23. ___________ Age: ______ 83 .Equity Bonds Debenture 61.8095238 Tp oF n ye f ud 2% 4 E uy qi t Bl ne a cd a Cs a h 1% 4 6% 2 In this statement.

2 d. No if yes. More than 2 4. above2 c. Do you invest? a. Do you have a Life Insurance Cover? a. No 5. What is Your Family‘s Annual Income (Rs.others 2. How many dependents you have? a. Below 2 b. Government b.Salaried c. Yes b. Yes b. None b.1.Business d. Occupation: a.Lakhs): a. 1 c. 5 Below 3. what is your investment concerns? Income replacement at death/disability Retirement Asset Purchase Building Cash reserves funding for children Others_____________________ 84 .

others c.Tax Free Proceeds 7. With which company do you have the ULIP scheme? a.13) 6. 20%-30% d.bonds d. Which type of fund you invest in? a.Flexibility b.proceed to Q. above 30% 85 . Equity b.Safety Liquidity c.(If ‘No’ .20 % c.TATA AIG LIFE e.BAJAJ ALLIANZ 8. Below 10% b.10% . How much returns are you getting on your ULIP investments annually (approximately)? a.Rate one of the following investment factors of your importance. ICICI PRUDENTIAL d. a. High Return d.Cash 9. LIC b.Debt c.

Below 10% b. would you like to avail it? a.10. How much returns are you getting on your investments annually (approximately)? a. are you investing in presently? 11.above 30% 12. Bharti AXA Group is offering an opportunity to participate in investment schemes generating high returns.10% . Yes b. Which Traditional plan _______________________. No FINDINGS When we talk about insurance sector there are lots of finding which are as follows: 86 . 20%-30% d.20 % c.

 In India there is a big segment to target the customer because most of the people not assured. 87 .  And also there is unawareness about the security of life or they are not will to take insurance. It may be the reason • • • • • Backwardness Un-education Culture difference Lack of guidance Lack of concern to future  The people are broad minded they can’t see future calamities it may be happen.  There are huge amount of investor but they can’t have any proper guidance to utilize their money in proper way.

ULIPs Vs Traditional Insurance Plans 88 .

First was the arrival of private insurance companies. the question your agent will ask you are . what is 89 . When you want to take a traditional endowment plan. another factor that has helped their cause is the impressive economic performance over the past few years that has translated into equally impressive returns on the stock markets. the good old endowment plan was the preferred way to meeting the dual objective of insuring oneself against an eventuality and setting aside savings to meet one’s financial objectives. While this now appears as one of the primary reasons for their popularity. Two factors were responsible for the advent of ULIPs on the domestic insurance horizon. Sum assured Perhaps the most fundamental difference between ULIPs and traditional endowment plans is in the concept of premium and sum assured. ULIPs were one of the most significant innovations introduced by private insurers. While these were the two factors most instrumental in marking the arrival of ULIPs.how much insurance cover do you need? Or in other words. Given that ULIPs are relatively new and remain an enigma for a large section of insurance-seekers. Then the insurance sector was thrown open to the private sector.Not too long back. we believe 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. including ULIPs (unit-linked insurance plans). The result was the launch of a wide variety of insurance plans. The other factor that saw investors take to ULIPs was the decline of assured returns in endowment plans. in this note we compare them to the traditional endowment plans to give you a perspective.

After the initial years. corporate bonds and money market instruments. although there was a provision for the same. Investments Traditionally. for some time now. This percentage varies across life insurance companies. within a ULIP there are options wherein there are caps on each investment avenue (stocks. bonds). Expenses ULIPs are considered to be expensive when compared to traditional endowment plans. There is also little difference in the administration charges. Since ULIPs have an equity component 90 . Let us take agent commissions to understand this better. endowment plans have discarded their traditional outlook on investing and allocate about 10%-15% of monies to stocks. Of course. corporate bonds and money market instruments. This notion is rooted more in perception than reality. However. Mortality expenses for ULIPs and traditional endowment plans remain the same. They invest across the board in stocks. They generally shirked from investing in the stock markets. endowment plans have invested in government securities. Then there is ongoing commission in the region of 5%.the sum assured you are looking for? The premium is calculated based on the number you give your agent. there are no IRDA regulations on ULIP commissions. it stabilizes at 1%-3% (again depending on the insurer). Unlike endowment plans. ULIPs have no such constraints on investments. Sale of a traditional endowment plan could fetch a commission as high as 30% (of premium) in the first year and 60% (of premium) over the first five years. government securities. One area where ULIPs prove to be more expensive than traditional endowment is in fund management. Sale of a ULIP fetches a relatively lower commission ranging from as low as 5% to 30% of premium (depending on the insurance company) over 1-3 years.

80%-1. With traditional endowment. A top-up is a onetime additional investment in the ULIP over and above the annual premium. You can select an option that best fits your objectives and risk-taking capacity. Having selected an option. This feature works well when you have a surplus that you are looking to invest in a market-linked avenue. ULIPs offer a host of options to the individual based on his risk profile. there is a price per unit. they incur fund management charges. Another innovative feature with ULIPs is the ’top-up’ facility. You select the only option you have and must remain with it till maturity. Transparency ULIPs are also more transparent than traditional endowment plans. There are insurance companies that offer as many as six options within a ULIP with the equity component varying from zero to a maximum of 100% (of corpus). Over time you know exactly how your ULIP has performed. This is the net asset value (NAV) that is declared on a daily basis. It also tells you whether or not your 91 .that needs to be managed actively. rather than keep in a savings account or a fixed deposit. Flexibility As we mentioned at the very beginning of this article. Your premium amount cannot be enhanced on a one-time basis and skipped premiums will result in your policy lapsing. you still have the flexibility to switch to another option. We could not get a fix on the fund management charges of traditional endowment plans despite having spoken to several insurance companies. This gives you an idea of how your money is being managed. A simple calculation can tell you the value of your ULIP investments.50% (of premium) range. Since they are market-linked. Most ULIPs also disclose their portfolios regularly. one aspect that gives ULIPs an edge over traditional endowment is flexibility. there are no investment options. These charges fluctuate in the 0. Most insurance companies allow a number of free ’switches’ in a year. There is also no concept of a top-up facility.

Of course. then you have the opportunity to do a rethink on your investment strategy across the board so as to ensure you are well-diversified across investment avenues at all times.000. On the same lines. monies received on maturity on ULIPs and traditional endowments are tax-free under Section 10. Liquidity Another flexibility that ULIPs offer the individual is liquidity. but you won’t get everything you have earned on your policy in terms of premiums paid and bonuses earned. there is no concept of a NAV. there is an initial lock-in period (3 years) after which the withdrawal is possible provided the minimum fund value is to be maintained. which gives you an idea of how your insurance plan is performing. Difference between Traditional Vs ULIPs Plans 92 .mutual fund and/or stock investments coincide with your ULIP investments. If you are clear that you will need money at regular intervals then it is recommended that you opt for money-back endowment. If they are. Premiums in ULIPs as well as traditional endowment plans are eligible for tax benefits under Section 80C subject to a maximum limit of Rs 100. You can surrender your policy. Since ULIP investments are NAV-based it is possible to withdraw a portion of your investments before maturity. But given that there are provisions that ensure a large chunk of the endowment portfolio is in high quality (AAA/sovereign rating) debt paper. insurers do send you an annual statement of bonus declared during the year.With traditional endowment. Traditional endowment has no provision for pre-mature withdrawal. disclosure of portfolios is likely to evoke little investor interest. However. Traditional endowment also does not have the practice of disclosing portfolios. Tax benefits Taxation is one area where there is common ground between ULIPs and traditional endowment.

2-There are two categories of benefit – guaranteed and nongouranted. non guaranteed benefits. except loyalty bonus in some cases. the insurer bears the investment risk. 6-Benefit are pre-determined 7. 4-For participant policies. is invested as desired by the the insurer’s discretion. bonuses are payable. 4-There are no bonuses. depend on NAV loans are not allowed. Loans may be provided. 3-Surrender are allowed but at a loss. 7-Loss is likely 8-Gains unlikely except through 8-Gains likely depending on market 93 . other charges and the purchase of units are unbundled and transparent.Loss is unlikely. such as bonuses.TRADIONAL PLANS ULIPs 1-All the premiums go into a 1-The premiums in excess of risk common fund and are invested at cover. 5-The amount of the premium used for insurance coverage. Loss. However. For guaranteed benefit. if any. other charges and investment are bundled up and not know. depend on the performance of the insurer. 5-The premium amount used for insurance coverage. policyholder. 3-Withdrawals are allowed. 2-The investment return may vary depending on the market movement and the investment risk is borne entirely by the policyholder. 6-Benefits are variable.

bonuses .

movement.

9- In traditional plan, there is no any 9- This plan lets you switch from one kind of fund switching facility. fund to another. Switching fund means moving money from one fund to another fund. There are 4 free fund switching allowed in a policy year. 10- In traditional plan, there is no 10- This plan allow to partial any kind of partial withdrawal withdrawal a part of your fund value facility, to meet urgent expenses. This is allowed only at least 3 annual premiums have been paid. The minimum amount of patria withdrawal is Rs 10,000. 11- In traditional plan, there is only one like Government security, Government Bonds no any other kind of fund available for investment. 11- This plan offers 5 different types of funds, which cater to the risk averse as well as those willing to take risks for a chance of greater returns. 1- Equity fund 2- Aggressive growth fund 3- Stable growth fund 4- Income fund 5-Short term fixed income fund

12-In traditional plan there is no premium holiday, if once your policy lapse the policy will not grow to market condition.

12-In ULIPs you can put the policy on premiums holidays after paying at least 3 annual premiums. The policy does not lapse and continued to grow
94

to market conditions. 13-In traditional plan there is no topup facility. Once your premium amount decided your cannot pay more apart from. 14-In traditional plan this facility not available. 13-In ULIPs you can invest additional amount of money via top-up. You can increase insurance coverage via topup. 14- ULIPs harness the “Power of Compounding” to grow the value of the investment. 15-Traditional plan provides only 15-A unit linked insurance plan gives protection of an insurance cover not you the best of both worlds;-Power of power of the equity market. the Equity Market and Protection of an Insurance cover.

RECOMMENDATIONS:
95

OCCUPATION The business segment can be targeted for ULIP (as an investment product) and Mutual funds as these products are offering high returns and safety which is the major concern of this segment. The need is to promote ULIP as a better product than the F.D’s and traditional plan can be promoted in lieu of the share markets. The service class can be a potential customer both for the ULIP and Traditional plan. ULIP needs to be promoted as an insurance product and can be sold emphasizing the importance and need of insurance. This segment is already investing into Traditional plan, thus the bank needs to promote its Traditional plan by promising the customers higher returns and safety than the others. AGE The segment (18-25) can be a potential customer segment as most of the people are falling in the income group of Rs. 2-5 lakhs. The company can target this segment by offering its ULIP product both as an insurance and investment product, which can provide high returns as the investments and provide the insurance cover too, as a large segment doesn’t have an insurance cover. The return on investments (ULIP and Traditional plan) is mostly between the 10% -20% brackets so products offering returns higher than this band can be offered to this category as 24% of people under this category are looking for building cash reserves and earning higher returns. The need is to make this segment aware of the products like ULIP (which is promising return of 20-25% p.a.) and tap as many customers as possible.

In order to tap the 25-35 years segment ULIP can be promoted as an investment option rather than an insurance product. Traditional plan need to
96

this is because this segment consists of risk averters as this segment prefers Fixed Deposits and government securities than any other investment product as safety is the most important factor which is being considered while investing by this segment. Traditional plan promising higher returns can be promoted in this segment. Traditional plan and ULIP both can be the best investment option for this segment as the basic reason for investment as can be seen from above is building Cash reserves and funding for children and both these products are offering high returns. Thus this segment can mainly be targeted for the Traditional plan as can be seen that very few people are investing traditional plan. The product ULIP is also highly acceptable by this segment.be promoted as only a small segment is investing in Traditional plan. As the segment 35-45 years is an investing and risk taking segment.D’s only then this segment can be tapped. thus product like ULIP and Traditional plan need to be promoted as safe investments and better than F. BIBLIOGRAPHY 97 . so both of these products can be promoted as a best investment options promising high returns and low risks.

moneycontrol.tata-aig-life.Management compass (magazine) 2.com 4.Money simplified ( text book) 7.(Neev) 98 .Text book of life insurance. 3.Business today magazine.1. 6.www. 5.www.Product workbook.com.

Sign up to vote on this title
UsefulNot useful