A

SUMMER TRAINING REPORT

ON

A COMPARATIVE ANALYSIS OF SELECTED INSURANCE

PLANS
UNDERTAKEN AT

AVIVA LIFE INSURANCE CO LTD

SUBMITTED IN PARTIAL FULFILMENT FOR THE

REQUIREMENT OF THE AWARD OF DEGREE OF

MASTER OF BUSINESS ADMINISTRATION (MBA)

TO

MAHARSHI DAYANAND UNIVERSITY, ROHTAK

BY

ARYA MITRA
ROLL NO. 2809
MBA (3rd Sem)
em)

AMITY BUSINESS SCHOOL, MANESAR

(2008-
(2008-2010)
 DECLARATION

I, Arya Mitra, Roll No. 2809, MBA (3rdsemester) of Amity Business School, Manesar,
hereby declare that the Summer Training Report entitled, “A Comparative Analysis of
Selected Insurance Plans”, is an original work and the same has not been submitted to any
other institute for the award of any other degree.

A seminar presentation of the Training Report was made on August 28, 2009 and the
suggestion as approved by the faculty was duly incorporated.

Presentation-In-Charge Signature of the Candidate

Signature: ___________________
Name of the Faculty: _________________

Countersigned:-

Director of the Institute

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 ACKNOWLEDGEMENT

Making a project is a result of meticulous efforts put in by many minds that contribute to the
final report formation. This is an honest effort towards putting forward whatever I have
gained as a valuable experience that will surely help me move up the learning curve towards
the path I have chosen.

“If the words are symbol of undiluted feelings and token of gratitude then let the words
play the heralding role of expressing my feelings.”

I am indeed thankful to honorable Prof (Dr) R C Sharma, Director, Amity Business

School, Manesar, who has provided the wonderful opportunity of getting exposed to
industrial and business working know-how. I extend my deepest thank to my mentor and
guide, Dr Vikas Madhukar, Professor, Amity Business School for giving me the
opportunity to understand the project and for providing me the necessary information
whenever required.

I owe a special gratitude to Mr. Prem Singh, Deputy Branch Manager, Aviva Life
Insurance Co Ltd and Mr. Ashish Bhardwaj, Assistant Sales Manager, Aviva Life
Insurance Co Ltd, for providing me valuable directions and guidance.

I would like to render my sincere thanks to Mr. Abhishek Verma, Branch Trainer, Aviva
Life Insurance Co Ltd for his immense encouragement, guidance and invaluable lecture
sessions throughout my training. He has been an inspirational mentor guiding me through
every step of my project, thus making the entire Project a complete learning process.

Never the last, I would take the opportunity to thank to all the staff members of “Aviva Life
Insurance Co Ltd” who gave their precious time in providing me with valuable information
whenever needed.

ARYA MITRA
MBA(3rd Sem)

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 TABLE OF CONTENTS

Certificate
Declaration
Acknowledgement

CHAPTER-I PAGE NO.

1. Significance of the study 1
2. Conceptualization 2
3. Focus of the study 37
4. Objectives of the study 38
5. Limitations of the study 39

CHAPTER-II
1. Industry Profile 41
2. Company Profile 46

CHAPTER-III
1. Review of Existing Literature 57
2. Research Methodology 62

CHAPTER-IV
Analysis and Interpretation 65

CHAPTER-V
1. Findings 75
2. Recommendations 76
3. Conclusion 77

Bibliography

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C HAPTER -I

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 SIGNIFICANCE OF THE STUDY

It is generally unpredictable what would going to happen next, thus, everybody require life
insurance due to the uncertainties of life. Life Insurance protects the dependents of deceased
person against certain economic losses that results from unexpected death of the bread
winner. It basically ensures that the family of deceased person does not suffer from much
loss.

Besides this protection, Life insurance is also a good investment option. One can do financial
planning for the various key stages (like career, marriage, childs’ education, retirement, etc.)
of life cycle.

Understanding the importance of Life Insurance, government of Inda established “Life

Insurance Corporation of India” in 1956 and opened the market for private players in 1999.
At present, there are 22 private life insurance companies in India offering a large range of
insurance products keeping in view the needs of the people. Even then, a huge population of
India is not insured. Unawareness among the people is one of the important reasons of this
fact. Hence, this study has become more significant to people as well as to organizations.

This study will help in creating awareness among people about the importance and benefits of
Life Insurance that will help in creating interest of people in life insurance products and
ultimately in the growth of insurance industry that will contribute to the growth of Indian
economy and last in the growth of World economy.

In this highly competitive scenario, this study will also help people to know about the various
plans and in selecting the best insurance plan among the available plans according to their
needs.

In this study, an attempt has been made to compare the Child Plan, Pension Plan & Term
Plan of Top 2 companies viz. ICICI Prudential Life Insurance & SBI Life Insurance with
AVIVA Life Insurance which helps the company know about the plans of other companies
and their competitive advantage over Aviva life’s plan. That will help company to make more
competitive plans and to gain the competitive advantages over its competitor and ultimately
by increasing the sale of the company, increase its market share.

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 CONCEPTUALIZATION

What Is Insurance ?
Basically insurance is assurance. Insurance is transfer and sharing of risk by equitable
loss sharing. Insurance does not get back or replace the assets, it only compensates for the
loss suffered. In other words, we can say that insurance is a mechanism that provides
compensation for the financial value of the assets in case of loss or damage. At last insurance
an important social security tool that offers the counter balance to risk, that is, security.

AInsurance is transfer and sharing of risk by equitable loss sharing.

AInsurance is assurance and protect the human life.
Or
In other words “insurance is a form of cooperation through which all those who are
subject to certain risks and losses pool their resources to compensate those who really
suffer a loss”

Essential Features to Insurance-

Ø There must be large numbers of similar risks.
Ø The loss caused by the risk must be definite.
Ø The occurrence of the loss must be accidental.
Ø The potential loss must be large enough to cause hardships.
Ø The cost of insuring must be economically feasible.

Need for Life Insurance:

n Possibility of damage caused by any event the risk.
n Uncertainty and unpredictability about future losses or damages which may or may
not happen, which may happen suddenly and unexpectedly.
n Insurance is relevant about the risk.
n Insurance is done against the contingency of the happening of such events.
n If there is no risk then no need of insurance7.
n Special need like medical expenses.
n Today insurance has become even more important due to the disintegration of the
prevalent joint family system, a system in which a number of generations co-existed

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 in harmony, a system in which a sense of financial security was always there as there
were more earning members.
n Times have changed and the nuclear family has emerged. Apart from other pitfalls of
a nuclear family, a high sense of insecurity is observed in it today besides, the family
has shrunk. Needs are increasing with time and fulfillment of these needs is a big
question mark.
n How will you be able to satisfy all those needs? Better lifestyle, good education, your
long desired house. But again - you just cannot fritter away all your earnings. You
need to save a part of it for the future too - a wise decision

Types of Insurance
There are two type of insurance.
Ø Non- life insurance
Ø Life insurance

1. Non life insurance:

In this we include health and general insurance. GIC was set up by nationalizing
the non-life business of insurance sector in 1972. The GIC operates as the holding
co. of its four subsidiaries, namely

• National Insurance Company Ltd.

• The New India Assurance Company Ltd.

• The Oriental Insurance Company Ltd.

• United India Insurance Company Ltd.

All the 68 Indian insurers and 45 non-Indian insurers who did business before
nationalization got merged and taken over by the four subsidiaries of GIC. These four
subsidiaries have branches all over the country and concentrate on non-life insurance
business like marine, fire, accident, medical expenses, Car and vehicle insurance etc. GIC can
invest up to 50% in private corporate and non-government sector.

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 2. Life insurance:

Life insurance or life assurance is a contract between the policy owner and the
insurer, where the insurer agrees to pay a sum of money upon the occurrence of the
policy owner's death. In return, the policy owner (or policy payer) agrees to pay a
stipulated amount called a premium at regular intervals.

A family is dependent for its food, clothing and shelter on the income brought by the family's
breadwinner. The family is secure so long as this breadwinner is alive and is capable of
earning. A sudden death (or disability) may leave the family in a financially difficult
situation. Uncertainty of death is inherent in human life and this uncertainty makes it
necessary to have some protection against the financial loss arising from untimely death. Life
insurance offers this protection.

Life Insurance was there in India since 1818 carried by private and foreign insurers. In 1956,
LIC Act was passed under which life insurance was nationalized and LIC was set up by
taking over the business of about 245 large and medium companies doing business of life
insurance. LIC had a monopoly of life business. It has set up the LIC mutual fund for
mobilizing savings of the public, particularly from rural and some urban areas and provides a
good return to investors.

Endowment Insurance Plan:

Endowment plans provide life insurance cover for a specified period. The important aspect is
that on maturity i.e. if the insured survives the term of the insurance, he/she receives the sum
assured at the end of the term.

Term Insurance Plan:

Term life insurance plans provide insurance cover for a specified period. The defining
characteristic of this type of life insurance plan is the complete absence of survival benefit i.e.
on maturity (surviving the term of the policy), you receive no money from the insurance
company.

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Unit Linked Insurance Plan:
Unit-linked Insurance Plans (ULIPs) combine the benefits of life insurance policies with
mutual funds. A certain part of the premium is invested in listed equities/debt funds/bonds,
and the balance is used to provide for life insurance and fund management expenses. Yields
earned on investments i.e. the value of the investment or the sum assured, whichever is
higher, is paid to the insured or nominee. This varies from company to company i.e. some
insurance companies pay the value of the investment in addition to the sum assured.
ULIPs have gained high acceptance due to attractive features they offer. These include:

Ø Flexibility
• Flexibility to choose Sum Assured.
• Flexibility to choose premium amount.
• Option to change level of Premium /Sum Assured even after the plan has started.
• Flexibility to change asset allocation by switching between funds

Ø Transparency
• Charges in the plan & net amount invested are known to the customer
• Convenience of tracking one’s investment performance on a daily basis.

Ø Liquidity
• Option to withdraw money after few years (comfort required in case of exigency)
• Low minimum tenure.
• Partial / Systematic withdrawal allowed

Ø Fund Options
• A choice of funds (ranging from equity, debt, cash or a combination)
• Option to choose your fund mix based on desired asset allocation

10 |
 SOME INSURANCE TERMINOLOGIES

Sum Assured:
It is the minimum guaranteed amount the nominee get in case of an unfortunate demise of the
life covered.
Premium:
The consideration paid by the insured to the insurer for making an insurance. If it is paid
regularly during the term of policy, it is called Regular premium and if it is paid as lump
sum, for the whole policy term, it is called Single premium.

Premium Payment Term (PPT):

It is the time period for which one have to pay the Regular Premium. It can be less than or
equal to policy term.

Additional Regular Premium (ARP):

It is the extra amount paid above the Regular Premium. Once you opt for this feature, you are
bound to pay it for the whole premium payment term. The minimum and maximum amount is
different in different insurance companies.

Top-Up Premium:
It is also the extra amount paid over and above the Regular Premium. The only difference
between ARP and Top-up premium is that one does not obliged to pay it for the whole policy
term. The minimum and maximum top-up amount is different for different companies.

Partial Withdrawal (PW):

One, if needed, can withdraw some amount from the fund value pertaining to regular
premium and top-up premium after completion of the 3or 5 policy anniversary or as per the
rules of the companies.

Fund Option:
Premium you paid, after deducting all the charges, rest amount is invested in the Debt,
Money and Equity market. Every Life insurance company has some options according to the
percentage of money allocated in these markets. These are called Fund Options.

11 |
Switch:
By opting this feature you can switch from one fund option to another fund option available
in the plan depending on your financial priorities and investment decision. Switching policy
of different companies are different. Like minimum and maximum amount switched between
fund options are different in different companies and switching charges are also different.

Systematic Transfer Plan (STP):

This option allows you to enter and exit the equity market not abruptly, at once, but slowly at
different times and at different levels. This has the effect of averaging out the risks associated
with the equity market, thus reducing the overall risk you face.
In this option some proportion of the fund value is automatically switched from debt
dominated fund to equity dominated fund on regular basis.

Automatic Asset Allocation (AAA):

This option helps you to automatically decrease your exposure to equity and increase your
exposure to dept, as you grow older. This option relies on the fact that an individual’s risk
appetite reduces with age and he tends to be more conservative with his investment. This
option provides you the flexibility of leveraging the returns from equitys market and secure/
book the profits by the way of auto asset allocation as he advances in his age.

Premium Re-direction:
This option helps you to modify the allocation proportion of your future premium into
various funds in accordance with your changing needs / preferences.

Settlement Option:
This option allows you to keep your money invested in the fund even after maturity and
enables you to receive the same systematically over a period of up to 5 years.

Cover Continuance Option:

This option ensures that your life insurance cover continues in case you are unable to pay
premiums, anytime after payment of first three years premium. All applicable charges will be
automatically deducted from the units available in your fund.

12 |
Free Look Period:
You can review the terms and conditions of the policy, 15 days from the date of the receipt of
the policy document and where you disagree to any of those terms and conditions, you have
the option to return the policy stating the reason of your objection.

Waiver of Premium Rider:

According to this rider, In case of an unfortunate event of death of the policy holder, the sum
assured is paid to nominee at that point of time and all the future premium will be paid by the
company.

Income Benefit (IB) Rider:

If this rider is opted for, then upon your death, 10% of the income benefit rider sum assured
will be payable to the appointee for every year.

Accidental Death Benefit (ADB) Rider:

If this rider is opted for, then in case of accidental death, the nominee will receive an
additional sum assured along with the death benefit.

Comprehensive Health Benefits (CHB) Rider:

If this rider is opted for, then upon permanent total disability due to illness or accident or
contracting any of listed 18 critical illnesses, then we shall pay the benefits payable in case of
your death.

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 INTRODUCTION ABOUT THE PLANS

1. CHILD PLANS
v Aviva Young Scholar Plan
Features:
Entry Age(Last Birthday) Parent: 18 – 50 years
Child: 0 – 17 years
Policy Term (PT) 10-25 years, subject to maximum maturity
age of 70 years
Premium Payment Term(PPT) 3 years/5 years/equal to policy term
Annual Premium Minimum Rs. 15000 if PPT = PT
Minimum Rs. 50,000 if PPT = 3years/5years
Maximum = No Limit
Top-up Premium Minimum: Rs. 1,000;
Maximum: 25% of total regular premium
paid
Sum Assured (SA) Minimum: 5* Annual Premium
Maximum: 1.5*Policy Term*Annual
Premium
Riders Available In Built: Waiver of Premium
Optional:
Accidental Death Benefit(ADB) Rider
Income Benefit(IB) Rider
Comprehensive Health Benefit(CHB) Rider
Premium Frequency Yearly, Half yearly, Quarterly, Monthly
Fund Options Enhancer, Growth, Balanced, Protector &
Bond
Partial Withdrawal Regular Premium: After 5 Policy Years
Top-up Premium: After 3 Years
Minimum: Rs. 5000,
Maximum: 25% of Fund value
Switches 1st 4 switches free of charge in a Policy year
Subsequent switches are charged at 0.5% of

14 |
 amount switched, subject to a maximum of
500 per switch
Minimum switch amount: Rs. 5000

Benefits
Ø Death Benefit

• Sum Assured will be paid immediately.

• All the future premium will be waived and paid into your fund.

Ø Loyalty Benefit

At the end of every 5th policy year, some amount as a percentage of fund value is added in
your fund as loyalty benefit. The rate of amount is as:
End of Policy Year Loyalty Addition as a % of Fund Value
pertaining to Regular Premium
Policy Year 5 0.50%
Policy Year 10 1.00%
Policy Year15 1.50%
Policy Year 20 2.00%
Policy Year 25 2.50%

Ø Maturity Benefit

• Fund value pertaining to Regular Premium and Top-up Premium will be paid
at the time of maturity.

Ø Tax Benefit

• The premium paid will be eligible for tax benefit as per Section 80C, 80D and
Section 10(10D) of the Income Tax Act, 1961.

15 |
 Charges:
Ø Policy Administration Charges:

• Policy administration charge will be Rs. 55 per month. This charge will
increase from 1st Jan every year by 5%.

Ø Fund Management Charges:

• Bond Fund: 1.00% per annum

• Protector Fund 1.00% per annum

• Balanced Fund 1.25% per annum

• Growth Fund 1.50% per annum

• Enhancer Fund 1.75% per annum

Ø Allocation Charges:

• Regular premium:

Allocation charges for PPT =PT

Annual Year 1 Year 2 Year 3 & 4 Year5 Year 6 &
Premium thereafter
<50,000 20% 10% 5% 2% 1%
>=50,000 to 18% 10% 5% 2% 1%
<1,00,000
>=1,00,000 16% 10% 5% 2% 1%

Allocation charges for PPT = 3 Years/5 Years

Policy Year Allocation Charge
Year 1 10%
Year 2 4%
Year 3 & thereafter 2%

• Top-up Premium:

The allocation charge shall be 98% of top-up premium.

16 |
Ø Mortality Charges:

• It is levied on the Sum at Risk (SAR).

• Sum at Risk = Sum Assured + Sum of future premiums payable till the date of
maturity.

• Sample annual charges per thousand SAR for a healthy male are given below:

Age 25 30 35 40
Rs. 1.31100 1.34665 1.65025 2.47250

Ø Surrender Charge:

Completed Policy years for which Surrender charges on Fund Value

premium is paid pertaining to regular premium
For PPT = PT
Less than 1 year 100%
1 year 90%
2 years 60%
3 years 30%
4 years 20%
5 years 5%
8 years 1%
More than 8 years Nil
For PPT = 3 years
less than 1 year 100%
1 year 90%
2 years 20%
More than 2 but less than 3 years 10%
3 years Nil
For PPT = 5 years
Less than 1 year 100%
1 year 90%
2 years 20%

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 3 years 10%
More than 3 but less than 5years 5%
5 years Nil

• ICICI PRU SMART KID UNIT-LINKED REGULAR PREMIUM

Features:
Entry Age(Last Birthday) Parent: 20 – 60 years
Child: 0 – 15 years
Maturity Age Parent: 75 Years
Child: 19 - 25 years
Policy Term (PT) 10-25 years, subject to maximum maturity
age of 75 years
Annual Premium Minimum Rs. 10,000
Maximum = No Limit
Top-up Premium Minimum: Rs. 2,000;
Maximum: 25% of total regular premium
paid
Sum Assured (SA) Minimum: 1,00,000
Maximum: 5*Annual premium
Riders Available Waiver of Premium
Accidental Death & Disability
Benefit(ADDB) Rider
Income Benefit(IB) Rider
Premium Frequency Yearly, Half yearly, Monthly
Fund Options R.I.C.H II, Multiplier II, Flexi Growth II,
Flexi Balanced II, Balancer II, Protector II,
Preserver,Return Guarantee Fund
Partial Withdrawal Regular Premium: After 5 Policy Years
Top-up Premium: Any time during PT
Minimum: Rs. 2000,
Maximum: 25% of Fund value
1 PW in a Policy Year
Maximum 5 PW during entire PT

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Switches 1st 4 switches free of charge in a Policy year
Subsequent switches are charged at Rs. 100
per switch
Minimum switch amount: Rs. 2000

Benefits
Ø Death Benefit

• Sum Assured will be paid immediately.

• All the future premium will be waived and paid by the company till maturity
of the policy.

Ø Maturity Benefit

• Fund value pertaining to Regular Premium and Top-up Premium will be paid
at the time of maturity.

Ø Tax Benefit

• The premium paid will be eligible for tax benefit as per Section 80C, 80D and
Section 10(10D) of the Income Tax Act, 1961.

Charges:
Ø Policy Administration Charges:

• Policy administration charge will be Rs. 60 per month.

Ø Fund Management Charges:

• Protector II 0.75% per annum

• Preserver 0.75% per annum

• Balancer II 1.00% per annum

• Flexi Balanced II 1.00% per annum

19 |
 • R.I.C.H. II 1.50% per annum

• Flexi Growth II 1.50% per annum

• Multiplier II 1.50% per annum

• Return Guarantee 1.50% per annum

Ø Allocation Charges:

• Regular premium:

Annual Year 1 Year 2 - 5 Year 6 – 10 Year 11

Premium onwards
<20,000 20% 5% 2% 1%
>=20,000 to 19% 5% 2% 1%
<50,000
>=50,000 18% 5% 2% 1%

• Top-up Premium:

The allocation charge shall be 1% of top-up premium.

Ø Mortality Charges:

Mortality charges are deducted on the basis of Sum Assured. Indicative charges per
thousand Sum Assured for a healthy male and female life per annum are shown in
table:
Age(yrs) <7 20 30 40 50
Male 0 1.33 1.46 2.48 5.91
Female 0 1.26 1.46 2.12 4.85

Ø Surrender Charges:

Completed policy years Surrender value as a % Surrender Charges

for which premiums are of Fund Value
paid

20 |
 Less than 1 year 0% 100%
1 year 25% 75%
2 years 40% 60%

However, this surrender value would be payable only after completion of three
policy years or whenever the policy is surrendered thereafter.
Following are the surrender values and charges applicable after payment of 3 full
years’ premium.
No. of completed policy Surrender Value Surrender Charge
years
3 policy years 96% 4%
4 policy years 98% 2%
5 policy years & above 100% 0%

• SBI LIFE- UNIT PLUS CHILD PLAN

Features:
Entry Age(Last Birthday) Parent: 18 – 57 years
Child: 0 – 15 years
Maturity Age Parent: 65 Years
Child: 18 - 25 years
Policy Term (PT) Min.: 8yrs or (18 – child’s age at entry)
whichever is higher
Max. : 25 yrs
Premium Payment Term(PPT) 3yrs/ 5yrs/ 7yrs/ Till the child attains 18yrs
Annual Premium Minimum Rs. 84,000; for PPT = 3yrs
Minimum Rs. 60,000; for PPT = 5yrs
Minimum Rs. 48,000; for PPT = 7yrs
Minimum Rs. 12,000; for PPT = PT
Maximum = No Limit
Top-up Premium Minimum: Rs. 2,000;
Maximum: 25% of total regular premium

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 paid
Sum Assured (SA) Minimum: 5*Annual Premium
Maximum: For age 18 – 40 yrs = 25*AP
For age 41 – 50 yrs = 20*AP
For age 51 – 57 yrs = 15*AP
Riders Available Waiver of Premium
Accidental Death & Disability(ADD) Rider
Dhanvantri Supreme (CI) Rider
Premium Frequency Yearly, Half yearly, Quarterly, Monthly
Fund Options Equity Optimiser Fund, Equity Fund, Bond
Fund, Growth Fund, Balanced Fund
Partial Withdrawal (PW) Regular Premium: After 3 Policy Years
Top-up Premium: Any time during PT
Minimum: Rs. 2000,
Maximum: 25% of Fund value
4 PW are free in a Policy Year
Maximum 5 PW during entire PT
Switches 1st 4 switches free of charge in a Policy year
Subsequent switches are charged at Rs. 100
per switch
Minimum switch amount: Rs. 10,000

Benefits
Ø Death Benefit

• Sum Assured will be paid immediately.

• All the future premium will be waived and paid by the company till maturity
of the policy.

• Fund Value will be paid at maturity.

Ø Maturity Benefit

• Fund value pertaining to Regular Premium and Top-up Premium will be paid
at the time of maturity.

22 |
Ø Loyalty Benefit

• To celebrate the 18th birthday of your child, SBI Life offer loyalty units by
way of free allocation of units based on the average of last 24 months Fund
value.

0.15*average last 24 months fund value*No. of policy till age 18

Ø Tax Benefit

• The premium paid will be eligible for tax benefit as per Section 80C, 80D and
Section 10(10D) of the Income Tax Act, 1961.

CHARGES:

Ø Policy Administration Charges:

• Policy administration charge will be Rs. 60 per month. This charge will
increased by 2% per annum for each subsequent year on the 1st business day of
the policy month following 1st April each year, subject to maximum of Rs.300
per month.

Ø Fund Management Charges:

• Equity Fund 1.50% per annum

• Equity Optimiser Fund 1.50% per annum

• Bond Fund 1.00% per annum

• Balanced Fund 1.25% per annum

• Growth Fund 1.35% per annum

23 |
 Ø Allocation Charges:

• Regular premium:

Annual Year 1 Year 2 – 3 Year 4 – 7 Year 8

Premium onwards
Upto 500,000 18% 5% 2% 1%
500,100 to 17% 5% 2% 1%
10,00,000
10,00,000 & 15% 5% 2% 1%
above

• Top-up Premium:

The allocation charge shall be 1% of top-up premium.

Ø Surrender Charges:

Year 2 3 4 5 6 & onwards

Surrender 25% 15% 4% 2% Nil
charges

2 PENSION PLANS
• AVIVA PENSION PLUS
Features:
Entry Age Min: 18 Years
Max: 65 Years
Vesting/Maturity Age Min: 40 years
Max: 70 years
Policy Term Min: 5 years
Max: Vesting age chosen
Annual Premium Min: 10,000
15,000 For PT < 10 Years
100,000 for Single Premium

24 |
 Max: No Limit
Additional Regular Premium Minimum: 1000
Maximum: No Limit
Top-up Premium Minimum: 1000
Maximum: No Limit
Fund Options Pension Index, Pension growth, Pension
Balanced, Pension Protector
Switches 1st 4 switches free of charge in a Policy year
Subsequent switches are charged at 0.5% of
amount switched, subject to a maximum of
500 per switch
Minimum switch amount: Rs. 5000

Benefits
Ø Death Benefit

• 100% of the value of units pertaining to regular/single premium.

• The value of units pertaining to top-up premium(s) and additional regular

premium, if any, are paid in addition to the above.

Ø Loyalty Addition

For all regular premium policies with term of 20 years and above, Aviva provides a loyalty
addition as a percentage of units pertaining to regular premiums only.
Policy Term (years) Loyalty Addition as a % of Fund Value
pertaining to Regular Premium
20 1.0%
21 1.1%
22 1.2%
23 1.3%
24 1.4%
25 1.5%
26 1.6%

25 |
 27 1.7%
28 1.8%
29 1.9%
30 & above 2.0%

Ø Maturity Benefit

• Take up to 1/3rd of the fund value as lump sum and use the balance to purchase
an annuity from Aviva.

• Buy an annuity from any other life insurance company.

Ø Tax Benefit

• Tax benefit will be as per Section 80C/80CCC(1) & Section 10(10A)(3) of the
Income Tax Act, 1961.

CHARGES:

Ø Policy Administration Charges:

• Policy administration charge will be Rs. 51 per month (Rs. 30 in case of

Single Premium policies). This charge will increase from 1st Jan every year by
5%.

Ø Fund Management Charges:

• Pension Index Fund: 0.75% per annum

• Pension Protector Fund 1.00% per annum

• Pension Balanced Fund 1.25% per annum

• Pension Growth Fund 1.50% per annum

26 |
Ø Allocation Charges:

• Regular premium:

Annual Premium Year 1 Year 2 onwards

< 10,000 25% 2%
10,000 to 29,999 20% 2%
30,000 to 99,999 12.5% 2%
100,000 to 499,999 10% 2%
500,000 & above 7.5% 2%
Single Premium Allocation Charge
<500,000 2%
500,000 & above 1%

• Top-up Premium:

The allocation charge shall be 2% of top-up premium.

Ø Surrender Charge:

Completed Policy years for which Surrender charges on Fund Value

premium is paid pertaining to regular premium
Upto 1 year 100%
More than 1 but upto 2 year 25%
More than 2 but upto 3 policy years 5%
More than 3 but upto 4 policy years 2%
More than4 policy years Nil

27 |
 v ICICI PRU LIFE TIME SUPER PENSION
Features:
Entry Age Min: 18 Years
Max: 65 Years
Vesting/Maturity Age Min: 45 years
Max: 75 years
Policy Term (PT) Min: 10 years
Max: 57 years
Annual Premium(APE) Min: 10,000
Max: No Limit
Sum Assured(SA) Minimum: 100,000
Maximum: PT*Annual Premium
Top-up Premium Minimum: 2000
Maximum: No Limit
Fund Options Pension R.I.C.H. II, Pension Flexi Growth II,
Pension Multiplier II, Pension Flexi
Balanced II, Pension Balancer II, Pension
Protector II, Pension Preserver, Pension
Return Guarantee Fund
Switches 1st 4 switches free of charge in a Policy year
Subsequent switches are charged at Rs. 100
per switch
Minimum switch amount: Rs. 2000
Riders Available Accidental Death & Disability Rider, Waiver
of Premium Rider

BENEFITS
Ø Death Benefit

• The Nominee will get the higher of sum assured or fund value as lump sum
where spouse is not the nominee.

28 |
 • Where spouse is nominee, this amount can be given as lump sum or can be
used to purchase an annuity from the company. Alternately, 1/3rd of this value
can be taken as lump sum and balance can be used to purchase an annuity.

Ø Maturity Benefit

• Take up to 1/3rd of the fund value as lump sum and use the balance to purchase
an annuity from ICICI Prudential.

• Buy an annuity from any other life insurance company.

Ø Tax Benefit

• Tax benefit will be as per Section 80CCC & Section 10(10A) of the Income
Tax Act, 1961.

CHARGES:

Ø Policy Administration Charges:

• Policy administration charge will be Rs. 40 per month.

Ø Fund Management Charges:

• Pension R.I.C.H. II: 1.50% per annum

• Pension Flexi Growth II 1.50% per annum

• Pension Multiplier II 1.50% per annum

• Pension Return Guarantee Fund 1.50% per annum

• Pension Balancer II 1.00% per annum

• Pension Flexi Balanced 1.00% per annum

• Pension Protector II 0.75% per annum

• Pension Preserver 0.75% per annum

29 |
Ø Allocation Charges:

• Regular premium:

Annual Year 1 Year 2 Year 3 – 10 Year 11

Premium Onward
10,000-19,999 20% 9% 1% Nil
20,000-49,999 17% 9% 1% Nil
50,000 & above 14% 9% 1% Nil

• Top-up Premium:

The allocation charge shall be 1% of top-up premium.

Ø Surrender Charge:

Completed policy years Surrender value as a % Surrender Charges

for which premiums are of Fund Value
paid
Less than 1 year 0% 100%
1 year 25% 75%
2 years 40% 60%

However, this surrender value would be payable only after completion of three policy years
or whenever the policy is surrendered thereafter.
Following are the surrender values and charges applicable after payment of 3 full years’
premium.
No. of completed policy Surrender Value Surrender Charge
years
3 policy years 96% 4%
4 policy years 98% 2%
5 policy years & above 100% 0%

30 |
 v SBI LIFE UNIT PLUS II PENSION
Features:
Entry Age Min: 18 Years
Max: 65 Years
Vesting/Maturity Age Min: 50 years
Max: 70 years
Policy Term (PT) Min: 5 years
Max: as per the vesting age chosen
Annual Premium(APE) Min: 24,000
Min: 25,000 for single premium
Max: No Limit
Sum Assured(SA) Single Premium Mode
Age 18-35 125% of SP, Max:
10 lac
36-45 Same, Max: 5 lac
46-60 Same, Max: 1.2 lac
Regular Premium Mode
Age 18- 35 5/10*APE, Max: 10
lac
36-45 Same, max: 5 lac
46-60 1.2 lac
Top-up Premium Minimum: 5000
Maximum: No Limit
Fund Options Equity Optimiser, Equity Pension, Bond
Pension, Growth Pension, Balanced Pension
Switches 1st 4 switches free of charge in a Policy year
Subsequent switches are charged at Rs. 100
per switch
Minimum switch amount: Rs. 10,000
Riders Available Accidental Death & Permanent Disability
Rider, Dhanvantri Supreme (Critical illness)
Rider

31 |
 BENEFITS
Ø Death Benefit

• The Nominee will get the higher of sum assured or fund value.

Ø Maturity Benefit

• Take up to 1/3rd of the fund value as lump sum and use the balance to purchase
an annuity from SBI Life.

• Buy an annuity from any other life insurance company.

Ø Tax Benefit

• Tax benefit will be as per Section 80CCC (1) of the Income Tax Act, 1961.

CHARGES:

Ø Policy Administration Charges:

• Policy administration charge will be Rs. 60 per month. This charge will
increased by 2% per annum for each subsequent year on the 1st business day of
the policy month following 1st April each year, subject to maximum of Rs.300
per month.

Ø Fund Management Charges:

• Equity Optimiser Fund 1.50% per annum

• Equity Pension Fund 1.50% per annum

• Bond Pension Fund 1.00% per annum

• Growth Pension Fund 1.35% per annum

• Balanced Pension Fund 1.25% per annum

32 |
Ø Allocation Charges:

• Regular premium:

Annual Year 1 Year 2 & 3 Year 4 & 5 Year 6-10 Year 11

Premium Onward
24,000- 15% 7.5% 5% 2% Nil
99,999
100,000- 12% 5% 5% 2% Nil
49,999
500,000& 9% 3% 3% 2% Nil
above

• Single Premium:

Annual Premium Allocation Charges

25,000-100,000 4%
100,000-500,000 3%
500,000 & above 2%

• Top-up Premium:

The allocation charge shall be 1% of top-up premium received during 1st 10

policy years. 11th onward allocation charges will be nil.

Ø Surrender Charge:

Policy Year For Regular Premium For single Premium

Mode Mode
Year 4 & 5 2% of F.V. Nil
Year 6-10 1% of F.V. Nil
11 onwards Nil Nil

33 |
 3 PROTECTION PLANS
v AVIVA LIFE SHIELD PLUS

Features:
Entry Age Minimum: 18 years
Maximum: 55 years
Maturity Age Minimum: 28 years
Maximum: 65 years
Policy Term (PT) 10 – 30 years
Sum Assured (SA) Minimum: 10 lacs
Maximum: No Limit
Premium Frequency Single
Regular: Yearly, Half-yearly, Quarterly &
Monthly
Riders Available In-Built: No
Additional: Accidental Death Benefit
Aviva Dread Disease

BENEFITS:
Ø Death Beneit:

In case of your unfortunate death during the policy term, nominee will receive the full
Sum Assured.

Ø Maturity Benefit:

As this is a purely protection plan (Term Plan), there is no maturity benefit.

Ø Tax Benefit:

Tax Benefits will be as per the Section 80C, 80D & 10(10D) of the Income Tax Act,
1961.

34 |
 v ICICI PRU PURE PROTECT

FEATURES:
Entry Age Minimum: 18 years
Maximum: 55 years
Maximum Coverage Age 75 years
Policy Term (PT) 10 – 30 years
Premium Minimum: 2400 per annum
Sum Assured (SA) Maximum: 24,99,999 for Classic
Minimum: 25 lacs for Elite
Maximum: No Limit
Riders Available In-Built: No
Additional: Accidental Death & Disability
Benefit Rider, Waiver of Premium Rider

BENEFITS:
Ø Death Benefit:

In case of your unfortunate death during the policy term, nominee will receive the full
Sum Assured.

Ø Maturity Benefit:

As this is a purely protection plan (Term Plan), there is no maturity benefit.

Ø Tax Benefit:

Tax Benefit as per section 80C.

35 |
 v SBI LIFE- SHIELD
Features:
Entry Age Minimum: 18 years
Maximum: 60 years
Maximum Coverage Age 65 years
Policy Term (PT) 5 – 25 years
Sum Assured (SA) Minimum: 3 lacs
Maximum: No Limit
Riders Available In-Built: No
Additional: Accidental Death & Permanent
Disability Benefit Rider, Premium Waiver
Benefit Rider

Benefits:
Ø Death Benefit:

In case of your unfortunate death during the policy term, nominee will receive the full
Sum Assured.

Ø Maturity Benefit:

As this is a purely protection plan (Term Plan), there is no maturity benefit.

Ø Tax Benefit:

Tax Benefit as per Section 80C & 10(10D).

36 |
 FOCUS OF THE PROBLEM

In India, one public sector life insurer that is Life Insurance Corporation and 22 private sector
companies are providing a wide range of insurance products. Even then a huge part of the
population does not have life insurance and the people those have life insurance, are not
sufficiently covered.

As the work was to sell the insurance plans of Aviva life insurance company mainly “Aviva
Young Scholar Plan, Aviva Pension Plus, Aviva Life Shield Plus”. During the field work,
people having income more than 3 lac per annum had been approached. The most of them
were focusing on the various charges levied in the plans. The responses were, “Charges are
very high”.

Hence the focus of the study is the charges levied in various plans in various companies. An
attempt is made to compare the charges levied in the plans by Aviva Life Insurance co. with
the same levied by the current top two private companies viz. ICICI Prudential Life Insurance
Co. and SBI Life Insurance Co. in their respective plans.

37 |
 OBJECTIVES OF THE STUDY

The main objectives of this study are:-

Ø To compare the plans of Aviva with its competitors.

Ø To compare the features offered in various plans.

Ø To compare the various charges levied in the plans.

Ø To find out a plan that best secures the child’s future.

Ø To find out one best retirement solution and protection plan that protects your life in

cheapest cost.

38 |
 LIMITATIONS OF THE STUDY

Ø The study is limited to few companies and few plans only.

Ø All the charges are not disclosed by the companies.

Ø The study is restricted to limited geographical area.

Ø The study is limited to a time period of July-August 2009.

39 |
CHAPTER-II

40 |
 GENESIS

Insurance in India can be traced back to the Vedas. For instance, Yogakshema, the name of
Life Insurance Corporation of India's corporate headquarters, is derived from the Rig Veda.
The term suggests that a form of "community insurance" was prevalent around 1000 BC and
practiced by the Arya.

Insurance, in its modern form, first arrived in India through a British company called the
Oriental Life Insurance Company in 1818, followed by the Madras Equitable Life
Insurance Society in 1829 and the Bombay Assurance Company in 1870. They insured the
lives of Europeans living in India. The first company that sold policies to Indians was the
Bombay Mutual Life Assurance Society starting in 1871. The first general insurance
company, Triton Insurance Company Limited, was established in 1850. For the next
hundred years, both life and non-life insurance were confined mostly to the wealthy living in
large metropolitan areas.

Regulation of insurance companies began with the Indian Life Assurance Companies Act,
1912. In 1938, all insurance companies were brought under regulation when a new Insurance
Act was passed. It covered both life and non-life insurance companies. It clearly defined what
would come under life and non-life insurance business. The Act also covered, among other
deposits, supervision of insurance companies, investments, commissions of agents and
directors appointed by the policyholders. This piece of legislation lost significance after the
insurance business was nationalized in 1956 (life) and 1972 (non-life) respectively. When the
market was opened to private participation in 1999, the earlier Insurance Act of 1938 was
reinstated as the backbone of the current legislation of insurance companies, as the IRDA
Act of 1999 was superimposed on the 1938 Insurance Act.

Insurance business was nationalized in 1956 with the Life Insurance Corporation of India
(LIC) designated the sole provider – its monopolistic status was revoked in 1999.

There were several reasons behind the nationalization decision:

Ø Firstly, the government wanted to channel more resources to national development

programs.

Ø Secondly, it sought to increase insurance market penetration through nationalization.

41 |
 Ø Thirdly, the government found the number of failures of insurance companies to be
unacceptable. The government argued that the failures were the result of
mismanagement and nationalization would help to better protect policyholders.

In 2006, the Indian insurance market ranked 19th globally and was the 5th largest in Asia.

The insurance industry in India has come a long way since the time when businesses were
tightly regulated and concentrated in the hands of a few public sector insurers. Following the
passage of the Insurance Regulatory and Development Authority Act in 1999, India
abandoned public sector exclusivity in the insurance industry in favour of market-driven
competition. This shift has brought about major changes to the industry. The inauguration of
a new era of insurance development has seen the entry of international insurers, the
proliferation of innovative products and distribution channels, and the raising of supervisory
standards. By mid-2004, the number of insurers in India had been augmented by the entry of
new private sector players to a total of 28, up from five before liberalization. A range of new
products had been launched to cater to different segments of the market, while traditional
agents were supplemented by other channels including the Internet and bank branches. These
developments were instrumental in propelling business growth, in real terms, of 19% in life
premiums and 11.1% in non-life premiums between 1999 and 2006.

There are good reasons to expect that the growth momentum can be sustained. In particular,
there is huge untapped potential in various segments of the market. While the nation is
heavily exposed to natural catastrophes, insurance to mitigate the negative financial
consequences of these adverse events is underdeveloped. The same is true for both pension
and health insurance, where insurers can play a critical role in bridging demand and supply
gaps. Major changes in both national economic policies and insurance regulations will
highlight the prospects of these segments going forward.

Last one decade of reforms in India have started yielding the results in the Indian economy.
The Government's resolve to push the reforms measures further, less bureaucratic hurdles,
investors' friendly business environment all put together have given tremendous boost to the
industries in terms of FDI and investments from FIIs.

The service industry in India has achieved a phenomenal growth in the recent past and among
them, Insurance is one sector, which has witnessed high decibel growth thanks to the investor
friendly regulator in the name of Insurance Regulatory Development Authority (IRDA). The

42 |
growth the market has achieved in terms of 18-20% in life insurance and 15-17% in non-life
insurance stands testimony to that.

Looking back at the history, the ride had not been so smooth to the public sector players like
LIC, GIC and its subsidiaries. For a long time, the insurance policies are not bought but sold
in the country because of so many odd reasons like low awareness level, aversion towards the
products as such, superstitious beliefs and less diverse product portfolio. The monolith in the
life insurance sector, Life Insurance Corporation of India had been basking in its past glory
and enjoying the monopolistic situation in the market.

Even the General Insurers like GIC and its subsidiaries were able to reach the people with
very few products out of many products in their kitty offering little or no options to the
customers. In 1956, when the Government of India nationalized the business of life
insurance, there were 245 private insurance companies operating in the country. And sixteen
years later, when the same happened to General insurance, there were 106. But the seeds
were sown as far back as 1993, when the Malhotra Committee headed by former Finance
Secretary and Ex-RBI Governor R.N.Malhotra was created to recommend the directions the
Indian industry should take. By 1994, the Committee was ready with its report.

In April 2000, Insurance Regulatory Development Authority (IRDA) came into being as a
statutory body to regulate the industry and to keep an eye on the private players. The mission
of IRDA is to protect the interests of the policyholders, regulate, promote and ensure orderly
growth of the insurance industry and for matters connected with the matter. After April 2000
a number of private players have entered the market and with this the insurance sector has
reached new heights. The number of people insured, penetration and the general awareness
has increased manifolds.

Some Major players With Their Registration Nos.

S.No. Registration Date of Reg. Name of the

Number Company
1 101 23.10.2000 HDFC Standard Life
Insurance Company
Ltd.
2 104 15.11.2000 Max New York Life
Insurance Co. Ltd.
3 105 24.11.2000 ICICI Prudential Life
Insurance Company

43 |
 Ltd.
4 107 10.01.2001 Kotak Mahindra Old
Mutual Life Insurance
Limited
5 109 31.01.2001 Birla Sun Life
Insurance Company
Ltd.
6 110 12.02.2001 Tata AIG Life
Insurance Company
Ltd.
7 111 30.03.2001 SBI Life Insurance
Company Limited .
8 114 02.08.2001 ING Vysya Life
Insurance Company
Private Limited
9 116 03.08.2001 Bajaj Allianz Life
Insurance Company
Limited
10 117 06.08.2001 Metlife India
Insurance Company
Ltd.
11 133 04.09.2007 Future Generali India
Life Insurance
Company Limited
12 135 19.12.2007 IDBI Fortis Life
Insurance Company
Ltd.
13 121 03.01.2002 Reliance Life
Insurance Company
Limited.
14 122 14.05.2002 Aviva Life Insurance
Co. India Pvt. Ltd.
15 127 06.02.2004 Sahara India
Insurance co. ltd.
16 128 17.11.2005 Shriram Life
Insurance Company
Ltd.
17 130 14.07.2006 Bharti AXA Life
Insurance Company
Ltd.
18 133 04.09.2007 Future Generali India
Life Insurance
Company Limited
19 135 19.12.2007 IDBI Fortis Life
Insurance Company
Ltd.
20 136 08.05.2008 Canara HSBC
Oriental Bank of
Commerce Life
Insurance Co. Ltd.

44 |
21 138 27.06.2008 Aegon Religare Life
Insurance Company
Ltd.
22 140 27.06.2008 DLF Pramerica Life
Insurance Company
Ltd.

45 |
 COMPANY PROFILE

Aviva Life Insurance India is a private insurance company formed from collaboration
between the Aviva insurance group of UK and the Dabur group, one of India's oldest and
top producer of traditional Health Care Products. Aviva's products are meant to provide
customers flexibility, transparency and value for money.

Aviva insurance group in UK with a history dating back to 1696, today stands as one of the
leading provider of life and pension products to Europe and other parts of the world. The
history of Aviva Life Insurance India starts at 1834 during nationalization when Aviva was
the largest foreign insurance group in terms of the compensation paid by the Indian
Government. In 1995 Aviva was the first foreign insurance company to start its
representative office in India. At present in Aviva Life Insurance India, the Aviva group is
a 26% share holder and the Dabur group holds 74% shares in the joint venture

SERVING PARTNERS:

26% stake

Joint venture, 2002

74% stake

46 |
 Founded in 1884, Dabur is one of India's oldest and largest group of
companies. A professionally managed company, it is the country's leading producer of
traditional healthcare products.

Aviva is UKs largest and the worlds fifth largest insurance Group. It is
one of the leading providers of life and pensions products to Europe and has substantial
businesses elsewhere around the world.

47 |
 AVIVA INSURANCE GROUP

Aviva Plc is the world’s fifth largest

insurance Group, the largest insurance
group in the UK and the second-largest
insurance group in Canada operating as
Aviva Canada. It is one of the leading
Ø Type Public
providers of life and pensions products in
Ø Founded 1696
Ø Headquarters London, Europe and has substantial businesses
England,
elsewhere around the world.
United Kingdom
Ø Key People Lord Sharman,
Chairman Founded in 1696, Aviva has 57,000
Andrew Moss,
employees serving over 50 million
CEO
Ø Industry Insurance customers in 28 countries around the
Ø Products Life Insurance
world.
Pensions
Ø Revenue £36,206 (2008)
Ø Asset Under mgt. £381 billon It has more than £381 billion of assets
Ø Market capitalization $ 25 billon under management.
Ø Employees 54,000(2009)
Ø Website www.aviva.com Aviva plc is listed on the London Stock
Exchange.

The main activities of Aviva are: Core Values

Ø Long-term Savings v Performance
Ø Asset Management co. v Progressiveness
v Team Work
Ø General insurance v Integrity

48 |
 DABUR INDIA LIMITED

Dabur India Limited is a leading Indian

consumer goods Company with interests
in Health Care, Personal Care and Food
Products. It is most famous for Dabur
Chyawanprash, Hajmola, Glucose-D,
Vatika Life.
Over more than a 100 years Dabur India
Ø Type Public (NSE, BSE ) Ltd. has been dedicated to providing
Ø Founded 1884
Ø Headquarter Ghaziabad, India nature-based solutions for a healthy and
Ø Key people V.C. Burman holistic lifestyle.
Ø Industry Health Care, Food
Ø Products Dabur Amla, Dabur Through the comprehensive range of
Chyawanprash, Vatika, products Dabur touches the lives of all
Hajmola & Real
Ø Market capitalization $ 2 billon consumers, in all age groups, across all
Ø Turn over 2286 crore social boundaries.
Ø Website www.dabur.com

VISION
v Dedicated to the Health & Well Being of every household

MISSION

• To Popularize a natural life style

CORE VALUES
v Ownership
v Passion for Winning
v People Development
v Consumer Focus
v Team Work
v Innovation
v Integrity

49 |
 AVIVA LIFE INSURANCE CO. LTD.

Life Insurance
KAL PAR CONTROL
History:
Aviva insurance group in UK with a history dating back to 1696, today stands as one of
the leading provider of life and pension products to Europe and other parts of the world.
The history of Aviva Life Insurance India starts at 1834 during nationalization when
Aviva was the largest foreign insurance group in terms of the compensation paid by the
Indian Government. In 1995 Aviva was the first foreign insurance company to start its
representative office in India. At present in Aviva Life Insurance India, the Aviva group
is a 26% share holder and the Dabur group holds 74% shares in the joint venture.

Mission:

• To be amongst India’s leading life insurers with quality business modal focus on
sustainable growth

Vision:
v AVIVA – where exceeding expectations through innovative solutions is “our” way
of life

Values:
v Customer centricity
v Passion for winning
v Integrity
v Innovation
v Empowered team

50 |
 PARTNERS:

Ø ABN AMRO Bank

Aviva's relationship with ABN India commenced in June 2002 under which the
bank introduces its customers to Aviva for insurance and provides access to its
affluent customer base across the country through its operations in 21 branches at
14 locations.
Ø The Lakshmi Vilas Bank Ltd
The Lakshmi Vilas Bank Ltd, based out of Karur, is among the top private banks in
India. It has 221 branches with a customer base of 1.2 million, across 10 states.
Currently Aviva products are sold across 204 branches of LVB.
Ø Punjab & Sind Bank
The Punjab & Sind Bank was established in the year 1908. Based on the principles
of social commitment to the people, to help the farmers, and the weaker sections of
the society to raise their standard of living and play a significant role in the
development of the country. Even after 96 years of its inception, the Punjab & Sind
Bank stands committed to honor the high ideals of its founding fathers. Punjab and
Sindh Bank has a network of 759 branches and 132 extension counters all over the
country with close to 9,765 employees. Forty-two per cent of its branches are in the
rural and semi-urban areas.
Ø IndusInd Bank
IndusInd Bank Ltd., is one of the leading new-generation private-sector banks in
India. It commenced operations in 1994 and had a net worth of Rs.866 crore as of
March 31, 2006. At present, the Bank has a network of 148 branches and 87 offsite
ATMs spread over 118 geographical locations in 24 states and Union Territories.
Ø Bank of Rajasthan
A private sector bank, with 467 branches and a major presence in North
(Rajasthan), has its Head Office in Mumbai. Having a customer base of nearly 14
lakh and a Rs 13,000 crore deposit base, the bank spreads across 12 regions of
Jaipur, Jodhpur, Bikaner, Kota, Bhilwara, Udaipur, Chandigarh, Delhi, Kolkata,
Indore, Mumbai and Bangalore.

51 |
 MANAGEMENT TEAM:

Ø TR Ramachandran
Chief Executive Officer & Managing Director
Ø Abhay Johorey
Chief Operating Officer
Ø Rajeev Arora
Director, Finance & Actuarial
Ø Shoumitro Roye
Sales Director
Ø Anil Sahgal
Director, Strategy & Chief Investment Officer
Ø Monica Agrawal
Director, Corporate Initiatives
Ø Chandan Khasnobis
Appointed Actuary
Ø Mohammad Shahber
Associate Director, Human Resources
Ø Vishal Gupta
Director, Marketing
Ø Sumit Behl
Director, Business Risk & Internal Audit
Ø Ravi Bhadani
Company Secretary and Associate Director – Compliance & Legal
Ø Munish Sharda
Director, Direct Sales Force
Ø Rishi Piparaiya
Director, Bancassurance

52 |
 AVIVA LIFE INSURANCE

FACT SHEET

Founded 2002

Started Operations 2nd June, 2002

Headquarter Gurgon, India

World Wide Web Address www.avivaindia.com

Managing Director & CEO T.R Ramachandran

Paid-Up Capital Rs. 1498.8 crores

Employees 7713

Number of Products 21

Number of Branches 224

AWARDS AND RECOGNITION:

Ø Aviva has been felicitated with the "Bronze Award for Excellence in People
Management" by Grow Talent Company Limited and Business world.
Ø Aviva has been ranked amongst the top 25 companies as per the Grate Place to Work
survey in the last four years.
Ø Aviva got the 4th rank among “India’s Best Companies to work for 2009” as per the
study done by “The Economic times & Great Place to work”.
Ø Aviva India won the coveted Award for Talent Management during the national
round of Asia Pacific HRM Congress.
Ø Aviva India was also felicitated by the HR Excellence Award by Amity Business
School.

53 |
 Market Share:

Market Share of Aviva is 2.3% in Private players.

ORGANISATIONAL STRUCTURE

54 |
 SWOT ANALYSIS

Strength:
• Joint venture between125 years old company i.e. Dabur India Ltd. And 313 years old
world’s 5th largest insurance group Aviva plc.
• Financial health checkup tool (LLKK) is used as a need generation tool.
• Special training to Agents & Advisors.
• Solvency Margin Of Aviva is 350%.
Weakness:
• Less awareness About Aviva Life Insurance among people.
• Do not use the name of Dabur.
• Less distribution channel.

Opportunities:
• Huge amount of Indian Population is not under Insurance cover.

• People having Insurance cover are not adequately covered. 94% Insured people are
under insured.

Threats:
• Huge Competition in the market having 23 Life insurance companies.

• LIC, which has a big distribution network, is very well known in rural areas and also
has got the advantage of being the only public sector company.

55 |
CHAPTER-III

56 |
 REVIEW OF EXISTING LITERATURE

For long, policyholders in India shunned term insurance plans in favour of endowment
policies — i.e. policies with a savings component. This is despite term insurance being a
crucial component of financial planning in all developed countries.

Term insurance is the most basic life insurance policy where the only benefit is compensation
to the nominee if the insured person dies. But in India the thought of not getting the money
‘invested’ back on maturity has been pushing buyers towards money back schemes and, in
the past few years, unit-linked insurance plans (Ulips), which boast of a seemingly irresistible
combination of investment, insurance and tax saving. Insurance agents too have actively been
pushing Ulips as these have helped pump up premium volumes. While the level of premium
has gone up, the purchase of protection has not been commensurate with the growth in the
income.

All this is set to change with insurers effecting cuts in premium rates on term insurance,
particularly for high-value policies entailing a sum assured of over Rs 25 lakh. For instance,
Birla Sun Life’s term insurance cover is available for an annual premium as low as Rs 13,400
(excluding 10.3% service tax) for a sum assured of Rs 1 crore and a 20-year term, if the
proposer is a healthy 30-year-old female.

This is in sharp contrast to a decade ago, when a 30-year-old would have to spend at least Rs
50,000 for a Rs 1-crore cover. Because of such high premiums, policyholders were reluctant
to ‘spend’ without any scope for returns. Today, LIC offers a Rs 1-crore cover for an annual
premium of Rs 25,700. The new low-premium regime marks a significant leap forward in
terms of affordability, and is capable of sparking considerable interest amongst insurance-
seekers for pure protection-oriented plans.

Touching new ‘lows’

Term insurance rates have come down primarily because of two reasons — competition and
increased life expectancy.

Following the advent of Ulips, insurance policies have become so complex that it is near
impossible to compare products of two companies. The only product that can really be
compared is the term insurance policy. Moreover, the comparison has been made easier with

57 |
quite a few internet-based aggregators giving term insurance quotes across companies. With
over 17 life companies in the fray, competition has pushed term insurance rates further down.

Decrease in mortality rates too has played its part. Most individuals buy term insurance to
cover any loss of revenue for their families if they die during their earning years. With the
mortality rates for those below 60 years coming down, insurance companies have been able
to sharply reduce term insurance premium.

In the past couple of years, the term insurance premium rates have declined by almost 30%,
with major private players like ICICI Prudential Life Insurance, Birla Sun Life and HDFC
Standard Life Insurance slashing their rates.

There are other factors for rate reduction as well. These include deepening insurance
penetration and the reduction in solvency margins prescribed by IRDA and availability of
better mortality data — which helps companies ascertain the risks better. Insurers have been
able to reduce cost of high-value policies further because well-heeled urban Indians, enjoying
the fruits of a blossoming economy, are seeing marked improvement in mortality rates. Their
life expectancy is enhanced by the quality of their lifestyle and access to best-in-class
healthcare facilities, leading to low probability of death due to natural causes.

Consequently, insurance companies do not view offering them inexpensive term cover as a
risky proposition. This, coupled with the increasing demand from this segment, has swollen
the volumes, which in turn, have contributed to shrinking rates. Therefore, life insurers’
margins for the term insurance portfolio haven’t come under pressure.

Sustaining the premiums at these levels doesn’t seem likely to hit a roadblock in the future
and, in fact, there are signs that the market could see low-cost insurance scaling new highs in
the coming days. “Offering pure term insurance at cheaper rates for HNI consumers is an
idea, which we might see more of in the near future,” says Manik Nangia, corporate vice-
president and head, product management, Max New York Life Insurance.

A win-win situation?

If indeed most people are living well beyond their earning years, does a term life insurance
pass the utility test from the policy holders’ perspective? While every individual needs to

58 |
carry out his/her own cost-benefit analysis before zeroing in on a suitable policy, overall,
these protection covers are worth buying, feel financial planners, particularly for those falling
in the high-income category. After all, their family is used to a superior lifestyle, and should
anything happen to the provider, the term cover’s sum assured should act as an appropriate
replacement for the income lost.

Also, given the high level of indebtedness of today’s working class, either in the form of
home loans or auto loans, there is a risk that the family is left with a liability rather than an
inheritance if the breadwinner dies. For such individuals, variants of term insurance cover —
mortgage protection plans and credit shield — would ensure that life insurance takes care of
their outstanding loans.

The thumb rule for buying a protection cover dictates that the sum assured should be equal to
100 times the insured’s monthly income. Though this estimate is generally considered to be
accurate, there is a view that to ensure complete peace of mind, the basic term cover could be
enhanced with riders like critical illness and disability benefit. The rationale behind this
argument is that in the event of an accident resulting in severe physical impairment or a
serious ailment, the term cover will be rendered ineffective as it comes into play only after
the insured’s death.

More complaints against insurance cos.

A seminar was held on Wednesday to help deal with consumer complaints related to
insurance service providers at the respective companies’ level itself. Rita Bhattacharya,
secretary of General Body Insurance Council, Mumbai, addressed those present. An
insurance ombudsman’s office has been set up in Chandigarh, which deals with complaints
from the city, Punjab, Jammu & Kashmir, Haryana and Himachal Pradesh.

Assistant secretary with the office, AC Keshav, stated that it was a facility, which people
could approach easily to raise insurance-related issues. He said complaints against life
insurance firms in the city had risen to 74 this year as compared to 68 for 2008. Public sector
insurance providers are higher on the grievance list as compared to private firms, he added.

“The northern region had 619 life insurance-related complaints this year, which numbered
517 last year,” said Keshav.

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Officials from LIC of India, New India Assurance, Oriental Insurance, ICICI Lombard,
HDFC Standard life and SBI Life attended the seminar.

Lifeless premium collections upset coverage

29 Jul 2009, 0616 hrs IST, Paramita Chatterjee, ET Bureau

A 12 % jump in the number of life insurance policies sold in April-June this year has resulted
in only 0.95% rise in new premium collections as consumers preferred smaller investments in
an economic downturn.

“Sale of life insurance products remained flat during the first quarter of the current fiscal
year. Consumers are preferring to invest smaller amounts in insurance products,” said Sanjay
Kumar Jha, zonal manager for north and head of pension business at Bajaj Allianz.

Life insurers collected Rs 14,456 crore as new premium in the first quarter of this fiscal
compared to Rs 14,320 crore during the corresponding period last year, according to data
released by the Insurance Regulatory and Development Authority (Irda). The companies sold
84.5 lakh policies in this fiscal year’s first quarter.

At a time when large salary hikes are on hold in corporate India and there is a check on
recruitment in several sectors, consumers are preferring to hold on to their money.

“This year, we have seen a month on-month improvement in performance. By the end of the
year, the industry will surely register a good growth rate,” said Reliance Life Insurance
president Malay Ghosh.

State-run Life Insurance Corporation, meanwhile, collected Rs 9,028 crore from 59 lakh
policies in the first quarter, up 20% over the corresponding period of last fiscal. The public
sector insurer sold 48 lakh policies in the year-ago period.

The 22 private life insurers sold 25.4 lakh policies in this period, collecting Rs 5,427 crore in
premium from new products — a decline of 20% on Rs 6,795 crore premium collections
during the corresponding period last fiscal year.

60 |
“Insurance is not a priority when it comes to consumer spending. The maximum sale of
insurance products happens only during the last quarter of every financial year when
consumers look at ways to save tax,” said an executive at a private insurer.

Insurance: A sunrise sector

29 Jul 2009, 0303 hrs IST, Pallavee Dhaundiyal Panthry, ET Bureau

The insurance sector in India offers immense growth opportunities. The potential can be
judged by the fact that today life insurance premiums account only 2.5% of the country's
GDP, while general insurance premiums are at only 0.65%. The sector has been thrown open
for private participation, but the largest life insurance company in India is still owned by the
government, known as Life Insurance Corporation.

While the rest of the world is in grip of an economic downturn and the year 2009 is
witnessing a downtrend in the life insurance industry, with almost flat growth, India for the
very first time has been ranked amongst the top10 life insurance markets worldwide.

The facts, data and reports for the year 2008-09 state that insurance sector penetration, both
in life and non-life segments, has improved since the time the sector has been opened for
private participation.

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 RESEARCH METHODOLOGY

RESEARCH APPROACHES
Two types of approaches are used during this study:
1. Analytical
2. Descriptive

DATA COLLECTION METHODS

To conduct the Business research the data is collected by:
Secondary Data: Secondary data is one which already exist and is collected from the
published sources.
The sources from which secondary data was collected are:
Ø Newspapers like Economic Times
Ø Internet
Ø BOOKS ON THE SUBJECT

Ø PUBLISHED REPORTS

Ø RECORDS OF ORGANIZATION

UNIVERSE:
Insurance Companies operating in India is the universe of this study.

POPULATION:
The following three Insurance companies made the population of this study:
• Aviva Life Insurance Co Ltd
• ICICI Prudential Life Insurance Co Ltd
• SBI Life Insurance Co Ltd

SAMPLE:
Child Plan, Pension Plan and Term Plan were taken for comparison as sample.

COMPARISON TECHNIQUE
The plans of selected companies were compared based on three important factors:

62 |
 • Plan features

• Allocation charge

• Policy Administration charges.

Each feature fetch 1 point.
Points Regarding Allocation charges & Policy Administration charges were as follows:

• Least Allocation Charges & Policy Admin. Charges fetch 15 points each.

• Next least Allocation Charges & Policy Admin. Charges fetch 10 points each.

• Highest Allocation Charges & Policy Admin. Charges fetch 5 points each.

Then all the points regarding features, allocation charges and policy administration charges
were added to find out the total points collected by the plans of each company.
The plan having highest points is rated 1 and so on.
The Term plan is compared on other basis because there is no allocation charges and no
policy administration charges.
The annual premium is calculated for different age people opting for the same policy term
and same sum assured.
The company offering least annual premium in an age group for the same policy term and
same sum assured is rated 1 and so on.

63 |
CHAPTER-IV

64 |
 COMPARISON OF CHILD PLANS:

Product Features Aviva Young ICICI PRU SBI Life- Unit Plus
Scholar SmartKid New Child Plan
ULRP
Cover on parent Yes Yes Yes
Cover On Child No No No
WOP Yes Yes Yes
IB Rider Yes Yes No
ADB Rider Yes Yes Yes
CHB Rider Yes Yes Yes
Increase/Decrease Yes No Yes
Premium
Increase/Decrease Yes Yes Yes
S.A
Top-up premium Yes Yes Yes
Partial Withdrawal Yes Yes Yes
Cover continuance Yes Yes Yes
option
Premium Re-direction Yes No Yes
Switches Yes Yes Yes
Systematic Transfer Yes Yes No
plan
Automatic Asset Yes No No
Allocation
Settlement option Yes Yes Yes
Loyalty Addition Yes No Yes
Free Look Period Yes Yes Yes
Total Points 17 13 14

65 |
 Comparison of Charges
The charges are compared with the help of examples.
Consider
Policy Term: 15 Years
Premium Payment Term: 15 Years
Annual Premium: 15,000/20,000/50,000
Allocation Charges:
Year APE: 15,000 APE: 20,000 APE: 50,000
Aviva ICICI SBI Aviva ICICI SBI Aviva ICICI SBI
Young PRU Life- Young PRU Life- Young PRU Life-
Schola SmartKi Unit Schola SmartKi Unit Schola SmartKi Unit
r d ULRP Plus r d ULRP Plus r d ULRP Plus
Chil Chil Child
d d Plan
Plan Plan
1 3000 3000 2700 4000 3800 3600 9000 9000 9000
2 1500 750 750 2000 1000 1000 5000 2500 2500
3 750 750 750 1000 1000 1000 2500 2500 2500
4 750 750 300 1000 1000 400 2500 2500 1000
5 300 750 300 400 1000 400 1000 2500 1000
6 150 300 300 200 400 400 500 1000 1000
7 150 300 300 200 400 400 500 1000 1000
8 150 300 150 200 400 200 500 1000 500
9 150 300 150 200 400 200 500 1000 500
10 150 300 150 200 400 200 500 1000 500
11 150 150 150 200 200 200 500 500 500
12 150 150 150 200 200 200 500 500 500
13 150 150 150 200 200 200 500 500 500
14 150 150 150 200 200 200 500 500 500
15 150 150 150 200 200 200 500 500 500
Total 7800 8250 6600 10,400 10,800 8800 25,000 26,500 22,00
charge 0
s

66 |
From the above table, It can infer that in every case the allocation charges are least in SBI
Life Unit Plus Child Plan and highest in ICICI PRU SmartKid Unit Linked Regular
Premium.
Hence rating According to Allocation charges are:
1. SBI Life Unit Plus Child Plan : 15

2. AVIVA Young Scholar : 10

3. ICICI PRU SmartKid Unit Linked Regular Premium: 05

Policy Administration Charges:

Year Aviva Young ICICI PRU SBI Life- Unit Plus
Scholar SmartKid ULRP Child Plan
1 660 720 750
2 693 720 765
3 728 720 780
4 765 720 795
5 803 720 811
6 843 720 828
7 885 720 844
8 929 720 861
9 976 720 878
10 1024 720 896
11 1075 720 914
12 1129 720 932
13 1186 720 951
14 1245 720 970
15 1307 720 990
Total 14,248 10,800 12,965

From the above table, It can infer that Policy Administration charges are least in ICICI PRU
Life SmartKid Unit Linked Regular Premium and highest in AVIVA Young Scholar.
Hence rating according to the Policy administration charges are:
1. ICICI PRU Life SmartKid Unit Linked Regular Premium: 15

2. SBI Life Unit Plus Child Plan 10

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 3. AVIVA Young Scholar 05

Total Points Collected Are:

Company Features Allocation Policy Admin. Total Points

Charges Charges
AVIVA LIFE 17 10 05 32
ICICI PRU LIFE 13 05 15 33
SBI LIFE 14 15 10 39

Interpretation:
From the above Column chart, it is clear that AVIVA Young Scholar has got the least points,
ICICI PRU Life SmartKid Unit Linked Reguiar Premium got the second highest points. Hence
SBI Life Unit Plus Child Plan is the best plan among these three life Insurer.

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 COMPARISON OF PENSION PLANS

Product Features Aviva Pension Plus ICICI PRU Life SBI Life- Unit Plus
Time Super Pension II Pension
Option of Life Cover No Yes Yes
WOP No Yes No
ADDB Rider No Yes Yes
Critical Illness Rider No No Yes
Increase RP No No Yes
Additional RP Yes No No
Indexation Yes No No
Top-up premium Yes Yes Yes
Partial Withdrawal No No NO
Cover continuance No Yes Yes
option
Premium Re- Yes No Yes
direction
Switches Yes Yes Yes
Systematic Transfer No No No
plan
Automatic Transfer No Yes No
Strategy
Change of Maturity Yes Yes No
Date
Loyalty Addition Yes No Yes
Free Look Period Yes Yes Yes
Open Market Option Yes Yes Yes
Single Premium Yes No Yes
Total Points 10 10 12

69 |
 Comparison of Charges
The charges are compared with the help of examples.
Consider
Policy Term: 15 Years
Annual Premium: 25,000/50,000/100,000/500,000
Allocation Charges:
Year APE: 25,000 APE: 50,000 APE: 100,000
Aviva ICICI SBI Aviva ICICI SBI Aviva ICICI SBI
Pensio PRU Life- Pensio PRU Life- Pensio PRU Life-
n Plus Life Unit n Plus Life Unit n Plus Life Unit
time Plus II time Plus II time Plus II
Super Pensio Super Pensio Super Pensio
Pensio n Pensio n Pensio n
n n n
1 5000 4250 3750 6250 7000 7500 10,000 14000 12000
2 500 2250 1875 1000 4500 3750 2000 9000 5000
3 500 250 1875 1000 500 3750 2000 1000 5000
4 500 250 1250 1000 500 2500 2000 1000 5000
5 500 250 1250 1000 500 2500 2000 1000 5000
6 500 250 500 1000 500 1000 2000 1000 2000
7 500 250 500 1000 500 1000 2000 1000 2000
8 500 250 500 1000 500 1000 2000 1000 2000
9 500 250 500 1000 500 1000 2000 1000 2000
10 500 250 500 1000 500 1000 2000 1000 2000
11 500 0 0 1000 0 0 2000 0 0
12 500 0 0 1000 0 0 2000 0 0
13 500 0 0 1000 0 0 2000 0 0
14 500 0 0 1000 0 0 2000 0 0
15 500 0 0 1000 0 0 2000 0 0
Total 12000 8500 12,500 20,250 15,500 25,000 38,000 31,000 42,000
charge
s

70 |
From the above table, It can infer that in every case the allocation charges are least in ICICI
Prudential Life Time Super pension and highest in SBI Life Unit Plus II Pension.
Hence rating According to Allocation charges are:
1 ICICI Prudential Life Time Super pension 15

2 Aviva Pension Plus 10

3 SBI Life Unit Plus II Pension 05

Policy Administration Charges:

Year Aviva Pension Plus ICICI PRU Life SBI Life- Unit Plus
time Super Pension II Pension
1 612 480 765
2 643 480 781
3 675 480 796
4 709 480 812
5 744 480 829
6 782 480 845
7 821 480 862
8 862 480 879
9 905 480 897
10 950 480 915
11 998 480 933
12 1047 480 952
13 1100 480 971
14 1155 480 990
15 1213 480 1010
Total 13216 7200 13237

From the above table, It can infer that Policy Administration charges are least in ICICI PRU
Life Time Super Pension and highest in SBI Life- Unit Plus II Pension.
Hence rating according to the Policy administration charges are:
1. ICICI PRU Life Time Super Pension 15

2. AVIVA Pension Plus 10

71 |
 3. SBI Life- Unit Plus II Pension 05

Total Points Collected are

Company Allocation Policy Admin. Features Total Points

Charges Charges
AVIVA LIFE 10 10 10 30
ICICI PRU LIFE 15 15 10 40
SBI LIFE 05 05 12 22

Interpretation:
From the above column chart, it is clear that ICICI PRU LIFE has got the maximum points &
SBI LIFE has got the minimum points. Hence ICICI PRU Life Time Super Pension is the best
retirement solution among the 3 Insurer.

72 |
 COMPARISON OF TERM PLAN
Term plan can be compared on the basis of premium payable for level covered. Table below
shows the sample of premium payable for Policy Term of 10 & Sum Assure of 15 lacs for
different companies:

Premium payable for PT=10 & SA=1500000

Age Aviva Life Shield ICICI Pru Pure SBI Life- Shield
Plus Protection
30 2465 2920 2988
35 3177 3771 3753
40 4583 5373 5237

From the above data it is clear that Aviva Life Shield provide you the basic cover level for
your life charging the minimum cost amoung the 3 life Insurer.

73 |
CHAPTER-V

74 |
 FINDINGS

The findings from the above study are as follows:

Ø Allocation charges in Aviva Young Scholar Plan are higher than SBI Life- Unit Plus
Child Plan.

Ø Policy Administration Charges in Aviva Young Scholar Plan are very much high than
other 2 Insurer.

Ø There is no option of life cover in Aviva pension Plus plan, whereas ICICI Pru life & SBI
Life provide you the option of life cover in their respective retirement plans.

Ø Aviva Pension Plus does not have any Rider, whereas ICICI Pru Life & SBI Life provide
you two Riders in their respective plans.

Ø Aviva Pension Plus have the option of Additional RP & Indexation, which the other 2
Insurer do not provide.

Ø Allocation charges & Policy Administration charges in Aviva Pension Plus Plan are
higher than ICICI Pru Life time Super Pension but lower than SBI Life- Unit Plus II
Pension.

Ø Annual premium in Aviva Life Shield Plus is lower than Other 2 Insurer.

Ø LIC is more popular among people than any other private insurance company.

Ø Aviva Life Insurance Company is not very much recognized among people.

75 |
 RECOMMENDATIONS

Based upon the above findings, the following recommendations were made:

Ø Company should reduce the charges in order to make the products more competitive.

Ø Company must reduce the policy administration charges levied in Aviva Pension Plus
Plan. PAC is approximately 2 times than levied by ICICI Pru.

Ø Company should provide the option of life cover & Rider in Pension Plan as done by the
other 2 Life Insurers.

Ø The company should spend more on the promotional activities like advertisement in
television, newspapers to create more awareness of the product as they have more recall
value.

Ø Company needs greater awareness of its product among target audience.

Ø Company should use the name of Dabur to create more awareness among the people.

Ø Company should open more of its branches so as to promote its product.

.

76 |
 CONCLUSION

After comparison of the plans of these three company, it is concluded that charges are varying
significantly between companies. Policy Administration Charges levied by Aviva Life
Insurance and SBI Life Insurance Companies are approximately two times levied by ICICI
Prudential Life Insurance Company.

Hence among Pension plans, ICICI Prudential Life Time Super Pension Plan is the best plan
among these 3 life insurers.

Whereas for Child Plan, SBI Life- Unit Plus Child Plan is the best plan among these 3
companies.

Aviva provides the cheapest Term among these 3 life insurance companies.

77 |
ANNEXURE

78 |
 BIBLIOGRAPHY

Website:
v www.avivaindia.com
v www.aviva.com
v www.irdaindia.com
v www.dabur.com
v www.iciciprulife.com
v www.sbilife.com

Book:
• Kothari CR (2005), ‘Research Methodology’, 2nd Edition, New Age International (p)
Ltd. Publisher, New Delhi

Journal:
v Annual Report of IRDA (2007-2008)
v IRDA Journal, Volume VII, No. 7, July 2009
v IRDA Journal, Volume VI, No. 6, June 2009

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