Professional Documents
Culture Documents
ON
COMPARISON BETWEEN THE PRODUCTS OF HDFC LIFE
AND
OTHER INSURANCE COMPANIES
SUBMITTED TO:
KURUKSHETRA UNIVERSITY
KURUKSHETRA
SUBMITTED BY:-
M.B.A (Dept.)
ACKNOWLEDGEMENT
I would like to take this opportunity to thanks and express my gratitude to all who have
helped and made this project a success.
I would like to extend my gratitude and special thanks to MR.Ajay Chauhan (Circle
Head) for giving me an opportunity to gain experience and expertise in an esteemed
organization like HDFC Life. I would also like to thanks Mr. Shamit Jalali and Mrs.
Sarvpreet Kaur for extending constant guidance and support throughout the period of
Internship. Their continuous support and guidance has helped me enhance my skills both
personally and professionally.
I would also like to express my immense gratitude to all the other team members at
HDFC Life. The working environment of the company was very healthy and provided
me an opportunity to learn.
Further , I would wish to extend my thanks to Ms NIDHI PUNJ, Faculty (MBA),
SDDIMS for giving me an opportunity to enhance my learning and skill base in the
Insurance sector by including a two months training programme
This project has indeed given me a lot of exposure in terms of handling different kinds of
people, in particular, potential customers.
MIKHIL BHAN
(Trainee)
PREFACE
Practical knowledge is an important part of theoretical studies. Any professional degree
remains incomplete without practical exposure. The students are required to develop deep
into the intricacies of the human resource related activities.
It covers all that which remains uncovered in the classroom. It offers all that which
remains an invaluable treasure of experience. It offers an exposure to practical of
management of business organization
As we know well that practical knowledge plays an important role in future building of
an individual. One can easily overcome the fear from that life in which he has to join is a
member after sometime
The research and methodology includes the research procedure, research ,research
design,sample design,data collection and finally limitations of study. The methods used
for conducting survey are by preparing a structured questionnaire and then taking the
views of respective respondents.
The analysis of the research data is done with the help of tabulation and diagrammatic
representation of data in respect to attitude of people towards respective facilities.
In last the findings and suggestions, which came out after going through the whole survey
of the organization are mentioned.
LIST OF TABLES
S.NO
TABLE
PAGE NO.
Table 1
52
Table 2
53
Table 3
54
Table 4
55
Table 5
56
Table 6
57
Table 7
59
Table 8
60
Table 9
61
10
Table 10
63
11
Table 11
64
12
Table 12
65
13
Table 13
66
LIST OF FIGURES
S.NO
FIGURES
PAGE NO.
Fig-1
52
Fig-2
53
Fig-3
54
Fig-4
55
Fig-5
56
Fig-6
57
Fig-7
59
Fig-8
60
Fig-9
61
10
Fig-10
63
11
Fig-11
64
12
Fig-12
65
13
Fig-13
66
ABBREVATIONS
CONTENTS
Chapter 1 Introduction
A) Statement of Problem/Objective of the study
B) Introduction to the company: This section contains:
a. Introduction to the industry
b. Introduction to Organization/ Products
Chapter 2 Review of literature
Chapter 3
Research Methodology
a) Scope of study
b) Significance of study
c) Research design
d) Data collection techniques
e) Statistical tools used for interpretation & analysis
f) Limitation of study
Chapter 4 Analysis & Interpretation
Chapter 5 Findings & Suggestions
a) Finding of the study
b) Suggestions & recommendations
Chapter 6 Conclusion
Bibliography
INRODUCTION
STATEMENT OF PROBLEM
This study was undertaken to identify which type of insurance plans HDFC LIFE should
market to beat Other insurance companies in India. A survey was undertaken to
understand the preferences of Indian consumers with respect to insurance. While
marketing policies the sole duty of an advisor/ agent is to provide insurance plans as per
customer requirements.
In effect plans (insurance products) should be flexible to suit individual requirements.
This research tries to analyze some key factors which influence the purchase of insurance
like the term of the policy, the type of company, the amount of annual premium payable
(capacity and willingness to spend), risk taking ability and the influence of advertising.
Solutions and recommendations are made based on qualitative and quantitative analysis
of the data.
Companies.
To find out factors that influence customers to purchase insurance policies and give
suggestions for further improvement
Insurance is a collective bearing of risk, Basic Human trait is to be averse to the Idea of
risk taking. Insurance, whether related to life or non-life, it provides people with a
reasonable level of security and assurance that they will be protected in any calamity.
Insurance in modern form originated in the 13th century. Marine Insurance is the oldest
form of insurance followed by life and fire insurance. Oriental Life Insurance Company
was incorporated at Calcutta in1818, followed by Bombay life Assurance Company in
1823 and Trion insurance company for General Insurance in 1850, in the year 1938 there
were 176 insurance companies.Insurance regulation began in India through the passing of
two acts i.e. life insurance companies Act of 1912 and the provident funds act of 1912
but the first comprehensive legislation was introduced with the insurance Act of 1938
that provided strict state control over insurance business in the country. The Insurance
act was amended to allow for social control over the general insurance business. Later on
in 1973, non-life insurance business was nationalized and the General
Insurance
Business (Nationalization) Act. The business of India Insurance grew at a faster pace as
competition amongst the Indian companies. The decision of
nationalization of life
insurance business took place in 1956, 245 Indian and Foreign insurance provident
societies were merged and nationalized. With all these changes which occurred 45 years
ago came into being the Life Insurance Corporation of India (LIC). In the year 1971 GIC
got nationalized, this resulted in the Creation of General Life Insurance as a holding
company of four subsidiaries:
In the year 2000-01, the Indian federal government lifted all entry restrictions for private
sector investors. Foreign investment insurance market was also allowed with 26 percent
capital. GIC was converted into India's national reinsure from December, 2000 all the
subsidiaries working under the GIC umbrella were restructured as independent insurance
companies.
In 1993, Malhotra Committee which was headed by former Finance Secretary and RBI
Governor R.N. Malhotra was formed to evaluate the Indian insurance industry and
recommend its future
direction. The Malhotra committee was set up with the objective of complementing the
reforms initiated in the financial sector.
The reforms were aimed at:
Creating a more efficient and competitive financial system suitable for the
requirements of the economy.
Recognizing that insurance is an important part of the overall financial system where it
was necessary to address the need for similar reforms
Since the opening up of the insurance sector in 1999, foreign investments of Rs. 8.7
billion have poured into the Indian market and 19 private life insurance companies have
been granted licenses.
Innovative products, smart marketing, and aggressive distribution have enabled fledgling
private insurance companies to sign up Indian customers faster than anyone expected.
Indians, who had always seen life insurance as a tax saving device, are now suddenly
turning to the private sector and snapping up the new innovative products on offer. Some
of these products include investment plans with insurance and good returns (unit linked
plans), multi purpose insurance plans, pension plans, child plans and money back plans.
(www.wikipedia.com)
KEY MILESTONES
1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate
the life insurance business.
1928: The Indian Insurance Companies Act enacted to enable the government to collect
statistical information about both life and non-life insurance businesses.
1938: Earlier legislation consolidated and amended by the Insurance Act with the
objective of protecting the interests of the insuring public.
1956: 245 Indian and foreign insurers along with provident societies were taken over by
the central government and nationalized. LIC was formed by an Act of Parliament- LIC
Act 1956- with a capital contribution of Rs. 5 crore from the Government of India.
The Insurance Regulatory and Development Authority (IRDA) is a national agency of the
Government of India, based in Hyderabad. It was formed by an act of Indian Parliament
known as IRDA Act 1999, which was amended in 2002 to incorporate some emerging
requirements. mission of IRDA as stated in the act is "to protect the interests of the policy
holders, to regulate, promote and ensure orderly growth of the insurance industry and for
matters connected therewith or incidental thereto." On the recommendations of the
Malhotra Committee report, in 1999, the Insurance Regulatory and Development
Authority (IRDA) was constituted as an autonomous body to regulate and develop the
insurance industry. The key objectives of the IRDA include promotion of competition so
as to enhance customer satisfaction through increased consumer choice and lower
premiums, while ensuring the financial security of the insurance market.
The IRDA opened up the market in August 2000 with the invitation for application for
registrations. Foreign companies were allowed ownership of up to 26%. The authority
has the power to frame regulations under Section 114A of the Insurance act, 1938 and has
from 2000 onwards framed various regulations ranging from registration of companies
for carrying on insurance business to protection of Policy holders interests.
In December, 2000, 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. Parliament passed a bill de-linking the four subsidiaries from GIC in
July, 2002. Today there are 24 general insurance companies including the ECGC and
Agriculture Insurance Corporation of India and 23 life insurance companies operating in
the country. The insurance sector is growing at a speedy rate of 15-20%. Together with
banking services, insurance services add about 7% to the countrys GDP. A welldeveloped and evolved insurance sector is a boon for economic development as it
provides long- term funds for infrastructure development at the same time strengthening
the risk taking ability of the country.
COMPOSITION OF AUTHORITY:
As per the section 4 of IRDA Act' 1999, Insurance Regulatory and Development
Authority (IRDA, which was constituted by an act of parliament) specify the
Composition of Authority .
The Authority is a ten member team consisting of
(a)
a Chairman;
(b)
(c)
INTRODUCTION TO ORGANISATION
HDFC S Life is one of India's leading private life insurance companies that offers a range
Of individual and group insurance solutions. It is a joint venture between Housing
Development Finance Corporation Limited (HDFC), India's leading housing finance
institution and Standard Life plc, the leading provider of financial services in the United
Kingdom. HDFC Ltd. holds 72.43% and Standard Life Ltd. hold 26.00% of equity in the
joint venture, while the rest is held by others.
HDFC Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC has since
emerged as the largest residential mortgage finance institution in the country. The
corporation has had a series of share issues raising its capital to Rs. 119 Crores. The gross
premium income for the year ending March 31, 2007 stood at Rs. 2,856 Crores and new
business premium income at Rs. 1,624 Crores. The company has covered over 8,77,000
lives year ending March 31, 2007.
HDFC operates through almost 450 locations throughout the country with its corporate
head quarters in Mumbai, India. HDFC also has an International Office in Dubai, UAE
with service associates in Kuwait, Oman and Qatar. HDFC is the largest housing
company in India for the last 27 years
LOGO OF HDFC LIFE INSURANCE COMPANY:
Currently over 5 million Policy holders benefiting from the services offered.
HDFC LIFE currently has 32 retail and 4 group products in its portfolio, along
with five Optional rider benefits catering to the savings, investment, protection and
retirement needs of Customers.
HDFC LIFE continues to have one of the widest reaches among new insurance
Companies with 568 branches servicing customer needs in over 700 cities and towns. The
Company has a strong presence in its existing markets with a base of 2, 00,000 Financial
Consultants.
B) HDFC Standard Life's advertising created high awareness for the brand and
bagged 2 silver and 1 bronze awards at the AD FEST 2007 National Awards
organised by the Advertising Agencies Association of India (AAAI). The 3
awards are the highest won by any single brand in the financial services business
(including banking, mutual fund, insurance and other financial \services).
C) CIO BOLD AWARD 2008: The company received the 2008 CIO Bold 100
Award for its mobile workforce portal.
D) SPECIAL 2008 CIO SECURITY AWARD: It was awarded Special 2008 CIO
Security Award for a secure computing environment, including identity
management respectively. Mr. Deepak M Satwalekar Awarded QIMPRO Gold
Standard Award.
E) HDFC Standard Life has received the Diamond EDGE Award 2009 for its mobile
workforce portal - Consultant Corner. EDGE - Enterprises Driving Growth and
Excellence (using IT) is an initiative by the ,Network Computing magazine to
identify, recognize, and honor end-user companies in India that have
demonstrated the best use of technology to solve a business problem, improve
business competitiveness, and deliver quantifiable ROI to stakeholders.
F) HDFC Standard Life has received the CIO The Ingenious 100 - 2009 Award, for
ATLAS (Agency Training Licensing and Servicing System). Additionally, the
company has received the CIO 100 Security Award 2009 for pioneering
LANDesk Management and Security Suite security implementation and taking its
security to a higher level of technological excellence.
G) Best Companies to Work for in India in 2010: HDFC Life has been adjudged
one of the Best Companies to Work for in India in 2010. The company
Participated in the Great Places to Work A study for the first time and ranked
first in The Insurance category. It ranked 34th on the Top 50 Best Companies to
Work for, in India 2010 list. The company was also awarded for its unique
employee initiative Mission in-Genius national quiz. The study has shown
that HDFC LIFE consequently develops employee talent programmes to keep
engaging and motivating its employees. The company provides some unique
platforms such as 'Mission in Genius' National quiz. The management is
accessible to all at all times and sincerely seeks Feedback from its employees
through programmes such as 'Sparsh', the study said.The Best Companies to Work
in India is a study conducted by the Great Place to Work Institute, India in
partnership with The Economic Times. The 2010 edition is the seventh study in
India, which received overwhelming response from more than 400 companies,
making it the Largest such study in India. And only 50 companies made it to the
Best Companies to Work list!
H) HDFC Standard Lifes YoungStar Super has been voted Product of the Year
2010 in the 'Insurance' category by more than 30,000 consumers nationwide
across 36 markets. The consumer study on product innovation in India was
conducted by A C Nielsen, the leading global research firm.
ASSOCIATE COMPANIES
HDFC limited
HDFC bank
HDFC mutual fund
HDFC sales
HDFC ERGO general insurance
HDB financial service
HDFC securities
BOARD OF MEMBERS
Strongest market share gain of 4.2%in private space in 2010-11 over same
period last year.
Claim repudiation ratio for financial year 2010-11 is 3.97%, which means
settlement of 96.03% claims.
INDIVIDUAL PRODUCTS
HDFC Standard Life has vast portfolio of retirement plans, children plans, term plans,
savings
investment
plans
and
health
plans.
Retirement Plan: With rising inflation, its absolutely necessary to make provisions for
the
future which makes retirement plan an important financial decision. Better known
as Pension plan, this plan takes care of financial needs after retirement by investing a part
of your savings for limited period. Pension plan provides steady income after retirement
and takes care of daily needs. The pension plans offered by HDFC Life are Personal
Pension
Plan,
Immediate
Annuity.
Child Plan: Parenthood brings responsibilities and no one is better judge of that than
you. Child Plan is a plan specifically designed to take care of financial needs of your
child. Child plan provides with necessary funds that will take care of childs education,
marriage etc. By investing small portion of your savings you secure the financial end of
your child. Child plan of HDFC Life are called SL Youngstar Super II, SL Youngstar
Super
Premium
and
Childrens
Plan.
Term Plan: A risk plan which provides comprehensive cover for your family in the
unfortunate event of untimely demise. A term life insurance plan provides good cover at
relatively nominal cost and has no survival benefits. HDFC Life term plans are Term
Assurance Plan, Premium Guarantee Plan, Loan Cover Term Assurance Plan and Home
Loan
Protection
Plan.
Investment Plan: Popularly known as ULIP, an investment plan invests part of your
savings in equity or debt market as per your preference. The objective of investment plan
is to give you returns which easily beat the rising costs since the usual returns in a bank
are extremely low. ULIPs offered by HDFC Life are Endowment Assurance Plan, SL
Crest, SL ProGrowth Super II, SL Pro Growth Maximiser, SL New Money Back Plan and
Single
Premium.
Health Plan: Slightly different from health insurance, health plan provides cover for
surgery costs, critical illness. A lump sum is paid irrespective of actual hospital bill.
Critical Care Plan and Surgi Care Plan are HDFC health plan.
Distribution Network:
HDFC has wide distribution network with 568 branches and has over 200000
Financial Consultants. HDFC Standard Life also has bancassurance partners- HDFC
Bank, Saraswat Bank and Indian Bank. HDFC products like HDFC SL Crest, HDFC SL
Youngstar Super II, HDFC SL ProGrowth Super II, HDFC SL Youngstar Super Premium
and HDFC SL Pro Growth Maximiser are also available online.
Financial Information:
The total premium earned for the half year ended September 30, 2010 was Rs 35,909
million. The profit after tax for the same period is Rs 646 million. There have been 1,298
death claims during the period out of which 1,045 claims were settled and 45 claims were
rejected.
Retirement/Pension Plan
Retirement/Pension Plan
Child Plan
Child Plan
Child Plan
Term Plan
Term Plan
Term Plan
Term Plan
HDFC SL Crest
Health Plan
Health Plan
Group Products
One-stop shop for employee-benefit solutions:
HDFC Standard Life has the most comprehensive list of products for progressive
employers who wish to provide the best and most innovative employee benefit
solutions to their employees. It offers different products for different needs of
employers ranging from term insurance plans for pure protection to voluntary plans
such as superannuation and leave encashment.
HDFC LIFE offers the following group products to esteemed corporate clients:
a) Group Term Insurance.
b) Group Variable Term Insurance.
c) Group Unit-Linked Plan.
Social Product
Development Insurance Plan :
Development Insurance plan is an insurance plan which provides life cover to members
of a Development Agency for a term of one year. On the death of any member of the
group insured during the year of cover, a lump sum is paid to those member
beneficiaries to help meet some of the immediate financial needs following their loss.
Eligibility
Members of the development agency and their spouses with:
- Minimum age at the start of the policy 18 years last birthday
- Maximum age at the start of policy 50 years last birthday
Employees of the Development Agency are not eligible to join the group. The group
to be covered is only eligible if it contains more than 500 members.
Premium Payments
The premium to be paid will be quoted per member in the group and will be the same
for all members of the group.
The premium can only be paid by the Development Agency as a single lump sum that
includes all premiums for the group to be covered. Cover will not start until the
premium and all the member information in our specified format has been received.
Benefits
On the death of each member covered by the policy during the year of cover a lump
sum equal to the sum assured will be paid to their beneficiaries or legal heirs. Where
the death is as a result of an accident, an additional lump sum will be paid equal to
half the sum assured. There are no benefits paid at the end of the year of cover and
there is no surrender value available at any time.
The role of the Development Agency
Due to the nature of the groups covered, HDFC Standard Life will be passing certain
administrative tasks onto the Development Agency. By passing on these tasks the
premium charged can be lower. These tasks would include:
Submission of member data in a specified computer format
Collection of premiums from group members
Recording changes in the details of group members
Disbursement of claim payments and the mortality rebate (if any) to group
members
These tasks would be in addition to the usual duties of a policyholder such as:
Payment of premiums
Reporting of claims
Keeping policy holder information up to date
Training and support will be available to give guidance on how to complete the tasks
appropriately. Since these additional tasks will impose a burden on the Development
Agency, the Development Agency may charge a Rs. 10 administration fee to their
members.
Prohibition of rebates
Section 41 of the Insurance Act, 1938 states
No person shall allow or offer to allow, either directly or indirectly, as an
inducement to any person to take out or renew or continue an insurance in respect
of any kind of risk relating to lives or property in India, any rebate of the whole or
part of the commission payable or any rebate of the premium shown on the policy,
nor shall any person taking out or renewing or continuing a policy accept any
rebate, except such rebate as may be allowed in accordance with the published
prospectus or tables of the insurer
If any person fails to comply with sub regulation (previous point) above, he shall
be liable to payment of a fine which may extend to rupees five hundred
The premium is collected from the policy holder. He is allotted a certain number of
units based of his contribution. The Net Asset Value is the value of each unit of the
fund. It is found by subtracting the charges and current liabilities from the current
assets and investments and dividing this number by the total number of outstanding
units.
Let us take an example. There are 100 investors and each invests Rs. 10 in a fund.
The total value of the fund is Rs. 1000 and each person is allotted 1 unit of Rs 10.
Now the money (Rs. 1000) is invested in the debt or equity market. Suppose the
fund value increased by 20%. As a result the Rs. 1000 invested became Rs. 1200.
Hence the value of every investor is now Rs. 12 and not Rs. 10.
Parameters
RBI Bonds
Fixed Deposits
Mutual Funds
Unit linked
Safety
High
High
Medium
High
Liquidity
None
High
High
High
Returns
Low
Low
High
High
Life Cover
1 time amount
1 time amount
1 time amount
10 times
Tax benefits
Tax free
Taxed
Taxed
Tax free
We find that life insurance unit linked plans is a good area to invest money in as it
provides liquidity, safety, high returns, life cover and tax benefits in a single plan.
HDFC SLIC offers the option of indexation to beat inflation. Risk is reduced to a
large extent as the company invests in a diversified portfolio of stocks.
Tax Benefits
INCOME
SECTION
MUCH HDFC
STANDARD
Sec. 80C
Rs.
saved
on plans.
investment
of
Rs. 1,00,000.
Sec. 80 CCC
Rs.
saved
on
Investment
of
Rs.1,00,000.
Sec. 80 D
Rs.
saved
Investment
Rs. 10,000.
conventional plans.
TOTAL SAVINGS
POSSIBLE
Rs37,389
Rs. 33,990 under Sec. 80C and under Sec. 80 CCC , Rs.3,399 under
Sec. 80 D, calculated for a male with gross annual income
exceeding Rs. 10,00,000.
Sec. 10 (10)D
HDFC Life believes that establishing a strong and ethical foundation is an essential
Prerequisite for long-term sustainable growth. The company has concentrated its focus on
Expansion of branch network, organizing an efficient and well trained sales force, and
setting up appropriate systems and processes with optimum use of technology. As all
these areas form the Basic infrastructure for establishing the highest possible customer
service standards.
The core values are drilled down to all levels of employees. The company continues to
promote High integrity in business practices and shun short cuts and unethical practices,
as they wish to be perceived as an institution with high moral standing. Since inception in
2000, when the Indian Insurance space was opened for private participation; they have
consistently focused on setting Benchmarks in all aspect on insurance business. Being the
first private player to be registered with the IRDA and the first to issue a policy on
December 12, 2000. The differentiators are:
INVESTMENT PHILOSOPHY:
D)
FOCUS ON TRAINING:
Training is an integral part of our business strategy. Almost all Employees have
undergone training to enhance their technical skills or the softer behavioral Skills
to be able to deliver the service standards that the company has set for itself.
Besides the Mandatory training that Financial Consultants have to undergo prior
to being licensed, they Have developed and implemented various training
modules covering various aspects including Product knowledge, selling skills,
objection handling skills and so on.
E)
HDFC Life's wide and diversified Product portfolio help individuals meet their various
needs, be it:
Protection: Need for a sound income protection in case of your unfortunate demise
Savings: Save for the milestones and protect your savings too
Marketing Campaigns:
HDFC LIFE Insurance has taken dynamic steps as part of changing brand identity.
HDFC LIFE in order to connect to younger target market made a series of changes.
HDFC LIFE dropped the standard word from their name to make it HDFC LIFE.
HDFC Life also changed their logo depicting more energy, exuberance, vibrancy,
dependability in their brand. HDFC Life also pushed their tagline sar utha ke jiyo with
television commercial, radio ads, print and other communication mediums. The tagline
presents the idea of living life with dignity which can be achieved through being self
dependent
and
insurance
is
part
and
parcel
of
the
same.
CORPORATE OBJECTIVE
Vision
'The most successful and admired life insurance company, which means that we are the
most trusted company, the easiest to deal with, offer the best value for money, and set the
standards
in
the
industry'.
Values
.Integrity
.Innovation
.Customer centric
.People Care One for all
.Teamwork
.Joy and Simplicity
Business Objectives
The primary objective of HDFC is to enhance residential housing stock in the country
through the provision of housing finance in a systematic and professional manner, and to
promote home ownership. Another objective is
to increase the flow of resources to the housing sector by integrating the housing finance
sector with the overall domestic financial markets. HDFC was incorporated in 1977 with
the primary objective of meeting a need - that of promoting home ownership by
providing long-term finance to house holds for their housing needs. HDFC was promoted
with an initial share capital of Rs. 100 million.
Organisational Goals
COMPETITIVE ANALYSIS
LIFE INSURANCE CORPORATION OF INDIA (LIC)
LIC has an excellent money back policy which provides for periodic payments of partial
survival benefits as long as the policy holder is alive. 20% of the sum assured is payable
after 5, 10, 15 and 20 years and the balance 40% is payable at the 20 th year along with
accrued bonus.
For a 25 years term , 15% of the sum assured becomes payable after 5,10,15 and 20 years
and the balance 40% plus the accrued bonus becomes payable at the 25 th year. An
important feature of these types of policies is that in the event of the death of the policy
holder at any time within the policy term the death claim comprises of full sum assured
without deducting any of the survival benefit amounts which have already been paid. The
bonus is also calculated on the full sum assured.
HDFC LIFE does not have a money back policy. It could offer a money back plan and
capture some portion of this market. While marketing insurance products I found that
many customers wanted to purchase these plans.
LIC offers 66 different plans; plans are formulated for specific occasions whole life
plans, term assurance plans, money back plan for women, child plans, plans for the
handicapped individuals, endowment assurance plans, plans for high worth individuals,
pension plans, unit linked plans, special plans, social security schemes diversified
portfolio of products. HDFC LIFE could diversify its product portfolio. It could add more
plans for high worth individuals and women.
ICICI PRUDENTIAL
ICICI Prudential is a stiff competitor for HDFC LIFE. The company is a merger between
ICICI Bank which is the biggest private bank in India and Prudential Plc which is a
global life insurance company.
The company has an investment plan which is market related Invest Shield Life. In this
plan even if the market falls, the premium will be returned to investors. It is a guaranteed
plan which ensures the company carefully invests your money. The stock market
performance of ICICI Prudential is much better than HDFC LIFE. The returns on the
growth fund were 46.28% compared to the 42.70% offered by HDFC LIFE. Customers
are attracted by higher returns and this is a plus point for Prudential.
The company is very well advertised. The advertisements are showcased in movies,
television, newspapers, magazines, bill boards, radio etc. The company has an excellent
brand ambassador Mr. Amitabh Bacchan. His promotion of the company builds trust
and faith in the minds of our people.
However the charges are very high in the plans offered by ICICI Prudential. It is 35%
during the first year, 15% in the next year and 3% from the third year onwards. Also a
higher minimum premium of Rs. 8000 is charged. Hence the policies are not accessible to
the lower strata of the society.
BIRLA SUN LIFE
Birla Sun Life Insurance Company Limited is a joint venture between The Aditya Birla
Group, one of the largest business houses in India and Sun Life Financial Inc., a leading
international financial services organization. The local knowledge of the Aditya Birla
Group combined with the expertise of Sun Life Financial Inc., offers a formidable
protection for your future.
The Aditya Birla Group has a turnover close to Rs. 33000 crores with a market
capitalization of Rs. 53400 crores (as on 31st March 2007). It has over 72000 employees
across all its units worldwide. It is led by its Chairman - Mr. Kumar Mangalam Birla.
Some of the key organizations within the group are Hindalco and Grasim.
Sun Life Financial Inc. and its partners today have operations in key markets worldwide,
including Canada, the United States, the United Kingdom, Hong Kong, the Philippines,
Japan, Indonesia, India, China and Bermuda. It had assets under management of over
US$343 billion, as on 31st March 2007. The company is a leading player in the life
insurance market in Canada.
Being a customer centric company, BSLI has invested heavily in technology to build
world class processing capabilities. BSLI has covered more than a million lives since
inception and its customer base is spread across more than 1000 towns and cities in India.
All this has assisted the company in cementing its place amongst the leaders in the
industry in terms of new business premium income. The company has a capital base of
520 crores as on 31st July, 2007.
Its Flexi Life Line Plan offers life long insurance cover till the policy holder is 100 years
of age. There are guaranteed returns of 3% p.a. net of policy charges after every 5 years
from the eleventh policy year onwards. However the charges are very high. The initial
charges for the first year are 65%. Hence the fund value is greatly reduced.
BAJAJ ALLIANZ
Bajaj Allianz is a joint venture between Allianz AG with over 110 years of experience in
over 70 countries and Bajaj Auto, a trusted automobile manufacturer for over 55 years in
the Indian market. Together they are committed to offering you financial solutions that
provide all the security you need for your family and yourself. Bajaj Allianz is the
number one private life insurer for the year 2005 2006. It is leading by 78 crores. It has
experienced a whopping growth of 216% in the last financial year.
The company has sold 13, 00,000 policies and is backed by 550 offices across India. It
offers travel insurance, motor insurance, home insurance, health and corporate insurance.
The mortality charges are lower than HDFC SLIC. The entry age could be zero years
which allow even new born babies to be insured.
TATA AIG
Tata Aig is a joint venture between the Tata group and American International Group Inc.
In one of the plans the company offers hospital cash benefit wherein it will pay Rs. 2500
per day in case of hospitalization and Rs.12.5 lakhs in case the person suffers from any
critical illness. Annual premium is much less (about Rs. 6712) to avail such a good
benefit. Charges are relatively low compared to HDFC LIFE for some policies.
The company offers high coverage plans at low cost. There is a plan even for a policy
term of 1 year. Your family can continue to enjoy their current lifestyle even in the case
of something happening to you. These plans are very flexible and HDFC SLIC could
adopt this idea of insuring individuals for short periods of time. For example; there is a
family of four. The only earning member is the father.
He has just taken a loan from a bank of 20 lakhs to purchase a new home. He is able to
repay the loan with his current salary in 15 years. The problem arises if something were
to happen to him within these fifteen years. Not only will the family face the emotional
and financial loss of their father but they will also have to repay the home loan or risk
being homeless.
MARKETING PROBLEMS
The old and out dated technique of tele marketing is used to prospect customers. More
modern techniques must be adopted. The company must sponsor shows and give
presentations in corporate houses. The financial health check must be performed for
every prospect to assess his/her true financial position and needs. Some of the advisors
skip this vital step and the prospect ends up with a plan they do not appreciate and soon
surrender or discontinue.
Some of the main problems in marketing the policies are:
Large amount of competition (18 players in the market)
Other brands are well advertised and have higher recall value
Some prospects have already invested and are not interested in further
investments
Consumers dont want to undertake medical examinations
REVIEW OF LITERATURE
Cohen and Sebstad (2006) highlight the need to carefully study clients insurance needs
before introducing a new product, where market research can include studying
(i) Clients needs
(ii) Specific products
(iii) The size of the potential market
Analyzing demand studies from Uganda, Malawi, Philippines, Vietnam, Indonesia, Lao
P.D.R., Georgia, Ukraine and Bolivia they find that the most prevalent risks relate to
health and loss of a wage earner. However, despite these patterns, households priorities
regarding demand for insuring certain risks are nevertheless context specific and solid
research is essential before entering a market.
There seems to be general agreement about the most important product attributes of
insurance products from a client perspective: simple, affordable and valuable (Churchill,
2006; Leftley and Mapfumo, 2006; McCord, 2008). These factors are determinants of
uptake and therefore determine the impact of insurance as well. An often identified
constraint in selling insurance to poor households is a lack of understanding of insurance
products . More educated households have been found to be the ones who are more likely
to take up insurance
Overcoming this constraint requires a dual effort to improve communication and financial
education on risk pooling, insurance and rights of policy-holders tailored to low-educated
and illiterate individuals on the one hand, and simplify policies on the other hand.
Clients understanding of insurance products is key not only to take up of insurance, but
also to use and appreciation of the policy as well as satisfaction with the insurance. The
impact of micro insurance on the welfare of the poorest households strongly depends on
whether households are aware of the benefits of the insurance, can therefore make full
use of it, and continue to stay members of their insurance policy. However, keeping
products affordable implies keeping costs low. Therefore, more research is needed on
2001a). More educated households have been found to be the ones who are more likely to
take up insurance (Chankova et al., 2008; Gine et al., 2007b).
Overcoming this constraint requires a dual effort to improve communication and financial
education on riskpooling, insurance and rights of policy-holders tailored to low-educated
and illiterate individuals on the one hand, and simplify policies on the other hand.
Clients understanding of insurance products is key not only to take up of insurance, but
also to use and appreciation of the policy as well as satisfaction with the insurance. The
impact of microinsurance on the welfare of the poorest households strongly depends on
whether households are aware of the benefits of the insurance, can therefore make full
use of it, and continue to stay members of their insurance policy. However, keeping
products affordable implies keeping costs low. Therefore, more research is needed on
innovative, cost-effective ways and channels of communication and financial education
tailored to cater to low-educated, illiterate people.
A serious constraint to the uptake of insurance has to be trust. The contrast of insurance
with microcredit helps to see the difference between these two insurance activities. In the
latter, money is offered first, and then lenders have to find ways of ensuring that clients
repay the loan lenders have to find ways to ensure they can trust that repayment by
clients will take place. In insurance, clients first part with their money, and then they have
to trust the insurer that they will indeed get money (or a service, such as health care)
when problems arise. Lenders have to trust borrowers; while insurers have to be trusted
by clients.
Radermacher et al. (2006) underline the importance of trust along these two dimensions:
first, that the insurer is willing to make payments to clients; and second, that the insurer is
able to deliver the payments. Trust is also essential for customer retention. Trust of
individuals and communities can be built by education, building on existing structures, or
through careful marketing and sales strategies.
McCord (2008) underlines that a fine balance is required between acquisition of new
technologies (which decrease costs by making the insurance product less labor intense)
and human contact to educate policy holders and build trust. Despite its importance, there
is little systematic knowledge about instruments and mechanisms to build trust
Dror et al. (2007) study households willingness to pay, analyzing data from a bidding
game conducted in more than 3000 households in India. They find a higher level of
nominal willingness to pay compared to previous studies; further, they show that
household income and nominal willingness to pay are positively correlated, while
household income and willingness to pay as a percentage of household income is
negatively correlated. Further, their results suggest that household size is the most
important determinant of willingness to pay levels. Willingness to pay could also be
enhanced by simplifying premium collection methods and making premiums payable in
higher frequencies could be helpful in promoting enrolment by low-income households
RESEARCH METHODOLOGY
RESEARCH DESIGN
Research is scientific & systematic research for accurate information on a specific"
In fact research is an art of scientific investigation. The advance learner's dictionary of
current English lays down the meaning of research as a careful investigation of
endemically thought search for new test in any branch of knowledge research is thus an
original contribution to that existing stock of knowledge making for its advancement.
A Research Design is the framework or plan for a study which is used as a guide in
collecting and analyzing the data collected. It is the blue print that is followed in
completing the study. The basic objective of research cannot be attained without a proper
research design. It specifies the methods and procedures for acquiring the information
needed to conduct the research effectively. It is the overall operational pattern of the
project that stipulates what information needs to be collected, from which sources and by
what methods.
SAMPLING
Sampling refers to the method of selecting a sample from a given universe with a view to
draw conclusions about that universe. A sample is a representative of the universe
selected for study.
SAMPLE SIZE
The sample size for the survey conducted was 270 respondents. This sample size was
taken on 95% confidence level and 6 significant level. Data universe for this sample is
10,00,000 which is approx population of Jammu City excluding people below age of 18
years.
STUDY AREA
The samples referred to were residing in Jammu City. The areas covered were Shastri
Nagar, Gandhi Nagar , Janipura, Nanak Nagar , Gole Gujral Camp , New Plots , Hari
Market , Nagrota , Sarwal , Laxmi Nagar, Roop Nagar , Greater Kailash , Bantalab ,
Subash Nagar,Talab Tiloo Bohri.
FIELD WORK:
Survey was done in JAMMU CITY
The data was collected over a period of six to seven weeks within JAMMU city using
well structured questionnaire. The respondents were contacted at their respective retail
outlets in various parts of the city.
Editing:
Editing is the process of examining errors when there is some inconsistency in the
responses as entered in the questionnaire or where it contains partial or vague answers.
Coding:
Coding is necessary to carryout the subsequent operations of tabulating and analyzing
data. If coding is not done, it will not be possible to reduce a large number of
heterogeneous responses into meaningful categories with the result that the analysis of
data would be weak and ineffective and without proper focus.
Tabulation:
Tabulation comprises sorting of the data into different categories and counting the
number of cases that belong to category the simplest way to tabulate is to count the
number of responses to one question. This is called uni variate tabulation. Where two or
more variables are involved in tabulation, it is called bi variate or multivariate tabulation.
In marketing research projects and generally both types of tabulation are used.
PRIMARY SOURCES
These include the survey or questionnaire method, telephonic interview as well as the
personal interview methods of data collection.
SECONDARY SOURCES
These include books, the internet, company brochures, product brochures, the company
website, competitors websites etc, newspaper articles etc.
Tables were used for the analysis of the collected data. The data is also neatly presented
with the help of statistical tools such as graphs and pie charts. Percentages and averages
have also been used to represent data clearly and effectively.
LIMITATION OF STUDY
A few limitations and constraints came in way of conducting the present study, under
which the researcher had to work are as follows:
Although all attempts were made to make this an objective study, biases on the
part of respondents might have resulted in some subjectivity.
Though, no effort was spared to make the study most accurate and useful, the
sample Size selected for the same may not be the true representative of the
customer community, resulting in biased results.
This being my maiden experience there is possibility of errors and mistakes.
Customers are very busy and have no time to attend the call.
Age group
18 - 25 years
26 - 35 years
36 - 49 years
50 - 60 years
More than 60 years
No. of Respondents
127
67
46
24
6
9% 2%
17%
18 - 25 years
26 - 35 years
47%
36 - 49 years
50 - 60 years
25%
FIG 1:
Analysis
From the chart above we find that 47% of the respondents fall in the age group of 18 25
years, 25% fall in the age group of 26 35 years and 17% fall in the age group of 36 49
years.
Therefore most of the respondents are relatively young (below 26 years of age). These
individuals could be induced to purchase insurance plans on the basis of its tax saving
nature and as an investment opportunity with high returns.
Q2) What is the gender of surveyed respondents?
TABLE 2:
Particulars
No. of Respondents
Male
193
Female
77
FIG 2:
250
200
193
150
No. of Respondents
100
77
50
0
Male
Female
Customer profile
Student
Housewife
Working Professional
Business
Self Employed
Government service employee
No. of respondents
62
5
116
49
24
14
FIG 3:
5%
9%
23%
18%
2%
Student
Housewife
Working Professional
Business
Self Employed
Government service
employee
43%
Analysis:
From the chart above it can clearly be seen that 43% of the respondents are working
professionals, 23% are students and 18% are into business. Therefore the target market
would be working individuals in the age group of 18 25 years having surplus income,
interested in good returns on their investment and saving income tax.
Q4) How many respondents have life insurance policy in their name?
TABLE 4:
FIG 4:
38%
62%
Yes
No
ANALYSIS:
This graph shows that out of total 270 respondents only 103 or 38% respondents have life
insurance policy in their name. Rest all dont have a single policy in their name. So there
is a very big scope for life insurance companies to cover these people. So in future
business of life insurace will gro further.
TABLE 5:
LIFE INSURER
HDFC STANDARD LIFE
BIRLA SUN LIFE
AVIVA LIFE INSURANCE
BAJAJ ALLIANZ
LIC
TATA AIG
ICICI PRUDENTIAL
ING VYSYA
BHARTI AXA
OTHERS
NUMBER OF POLICIES
4
3
6
7
55
6
12
6
2
2
FIG 5:
Percentage
53%
60%
50%
40%
30%
6%11%6% 2% 2%
20% 4% 3% 6% 7%
10%
0%
Company Name
Analysis:
In India, the largest life insurance company is Life Insurance Corporation of India. It has
been in existence in India since 1956 and is completely owned by the Government of
India. Today the organization has grown to 2048 offices serving 18 crore policies and has
a corpus of over 340000 crore INR.
Q6) How much is the annual premium paid by individuals for life insurance?
TABLE 6:
No. of respondents
40
26
18
10
FIG 6:
4%
10%
17%
2% 3%
39%
25%
Analysis:
From the chart above we find that, 39% of the respondents surveyed pay an annual
premium less than Rs. 10001 towards life insurance. 25% of the respondents pay an
annual premium less than Rs. 15001 and 17% pay an annual premium less than Rs.
25000. Hence we can safely say that HDFC LIFE would be able to capture the market
better if it introduced products/plans where the minimum premium starts at Rs. 5000 per
annum.
Only 19% of the respondents pay more than Rs. 25000 as premium and most products
sold by HDFC LIFE have Rs.12000 as the minimum annual premium amount. They
should introduce more products like Easy Life Plus and Safe Guard where the minimum
premium is Rs.6000 p.a. and Rs. 12000 p.a. respectively. This would definitely increase
their market share as more individuals would be able to afford the policies/plans offered.
TABLE 7:
Type of Plan
No. of Respondents
105
Endowment Plans
122
Pension Plans
16
Child Plans
19
FIG 7:
3% 7%
6%
39%
Term Insurance
Plans
Endowment Plans
Pension Plans
45%
Analysis:
Child Plans
Tax Saving Plans
From the chart given above we can clearly see that 45% of the respondents hold
endowment plans and 39% of the respondents hold term insurance plans. Endowment
plans are very popular and serve two purposes life cover and savings.
Q8) Are you aware of the new unit linked insurance plans in the market?
TABLE 8:
No. of Respondents
154
116
FIG 8:
43%
57%
Yes
No
Analysis:
From the chart given above we find that 57% of the respondents are aware of unit linked
life insurance plans and 43% are not aware of such plans. These plans should be
promoted through advertising
When the policy matures the individual gets his fund value. The value of his fund is
calculated by multiplying the net asset value and number of units held by them on that
day.
Q9) How much would you be willing to spend per annum if you were to go for an
investment/insurance plan?
TABLE 9:
No. of respondents
Percentage
41
15%
73
27%
110
41%
41
15%
2%
FIG 9:
41%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
15%
27%
15%
2%
Percentage
Insurance Premium
Analysis:
From the graph above, we can clearly see that 41% of the respondents would be willing
to spend between Rs. 10001 Rs. 25000 for life insurance. 27 % would be willing to
spend between Rs. 6001 Rs. 10000 per annum. Only 15% would be willing to spend
more than Rs. 25000 per annum as life insurance premium.
We could say that the maximum premium payable by most consumers is less than Rs.
25000 p.a. This is further reduced as most customers have already invested with LIC,
ICICI Prudential, Birla Sun Life, Bajaj Allianz etc.
No. of respondents
51
41
95
38
24
5
3
13
40%
30% 19%
20%
10%
0%
35%
15%
14%
9%
2%
1%
5%
Percentage
Years
Analysis:
From the chart given above it can be seen that 35% of the respondents prefer a policy
term of 10 15 years, 19% prefer a term of 3 5 years and 15% prefer a term of 6 9
years. This means that HDFC LIFE could introduce more plans wherein the premium
paying term is less than 15 years.
TABLE 11:
Parameter
Advertisements
High returns
Advice from friends
Family responsibilities
Others
FIG 11:
No. of Respondents
35
84
46
89
16
6% 13%
Advertisements
High returns
33%
Family
responsibilities
Others
17%
Analysis:
From the chart above it can be seen that 33% of the respondents purchase life insurance
to secure their families, 33% take life insurance to get high returns, 17% purchase
insurance on the advice of their friends and 13% purchase insurance because of the
influence of advertisements.
Q12) In which kind of company would you prefer to make a purchase of insurance?
TABLE 12:
Type of Company
Government Owned
Company
No. of Respondents
Percentage
127
47%
62
23%
Private Company
49
18%
Foreign Company
32
12%
FIG 12
70%60%
60%
50%
40%
29%
30%
20%
7%
4%
10%
0%
Analysis:
From the graph above we find that 60% of the respondents preferred to purchase
insurance from a government owned company, 29% of the respondents preferred to
purchase insurance from a public limited company and only 4% of the respondents
preferred a foreign based company. Heavy advertising through television, newspapers,
magazines and radio is required.
Q13) What kind of returns would you look at from your investments?
TABLE 13:
Expected Returns
Less than 5%
5% - 10%
11% - 15%
16% - 20%
21% - 25%
26% - 30%
31% - 40%
41% - 50%
No. of respondents
5
39
46
49
46
27
22
14
22
FIG 13:
20%
17% 18% 17%
18%
14%
16%
14%
10%
12%
8%
10%
8%
6%
4% 2%
2%
0%
8%
5%
Ex pected Returns
Analysis:
From the chart above it can clearly been seen that 18% of the respondents would like 16
20% returns, 17% would like returns between 21 25% and 17% would like returns of
11 15% on their investments. Therefore the average return on investment should be at
least 16 20 %.
Most consumers are willing to adapt to some amount of risk but still want some
guaranteed returns. Therefore the bulk of investment should be made in the balanced fund
with 50% debt and 50% equity. The returns on the Secure Fund are guaranteed as these
involve investment is government securities and the debt market. But the returns on these
instruments are low (8 10%). If the company invests in shares, returns are higher (39%)
but correspondingly risk borne by the policy holder is also higher. Therefore a good
combination of the two instruments is often a wise choice.
FINDINGS:
The survey that maximum 43 %of the respondents are in working professionals,
Out of 270 respondents 38% of the respondents have life insurance policy
Insurance has grown to 2048 offices serving 18 crore policies and has a corpus of
over 340000 crore INR.
39% of the respondents surveyed pay an annual premium less than Rs. 10001
towards life insurance. 25% of the respondents pay an annual premium less than
Rs. 15001 and 17% pay an annual premium less than Rs. 25000. 19% of the
respondents pay more than Rs. 25000 as premium
57% of the respondents are aware of unit linked life insurance plans and 43% are
not aware of such plans.
41% of the respondents would be willing to spend between Rs. 10001 Rs. 25000
for life insurance.
35% of the respondents prefer a policy term of 10 15 years, 19% prefer a term
of 3 5 years and 15% prefer a term of 6 9 years
Speak about the good features a plan offers like high returns, life cover, tax
benefits, indexation, accident cover while prospecting customers
Try to sell the product/plan which the consumer requires and not the plan where
the advisors benefit is higher
Improve the efficiency in operations
Bring out policies with small premiums payable for short periods of time Rs.
5000 Rs. 10000 per annum for 10 years
Attract the youth of India with higher returns on investment as returns are the
motivating factor which influence purchase of insurance
Promote insurance in colleges and corporate houses
HDFC LIFE could have a brand ambassador or a mascot to promote its services
CONCLUSION
CONCLUSION
HDFC LIFE insurance is first private life insurance company in India. It has businesses
spread out across the globe. It was registered on 23 rd December 2000. It currently ranks
number 4 amongst the insurers in India (Source: annual premium provided by the
company)
The company faces a large amount of competition. To sustain itself it must promote its
products through advertising and improve its selling techniques. Consumers must be
aware of the new plans available at HDFC LIFE. The medium of advertising used could
be television since most of its competitors use this tool to promote their products. The
company must be promoted as an Indian company since consumers seem to have more
trust in investing in Indian firms.
The unit linked concept must be specifically promoted. The general perception of life
insurance has to change in India before progress is made in this field. People should not
be afraid to invest money in insurance and must use it as an effective tool for tax planning
and long term savings.
HDFC LIFE could tap the rural markets with cheaper products and smaller policy terms.
There are individuals who are willing to pay small amounts as premium but the plans do
not accept premiums below a certain amount. It was usually found that a large number of
males were insured compared to females. Individuals below the age of 30 (mostly male)
were interested in investment plans. This was a general conclusion drawn during
prospecting clients.
BIBLIOGRAPHY
A) BOOKS: C.R. Kothari , Research Methodology
QUESTIONNAIRE
Q1) What is the age group of surveyed respondents?
o
o
o
o
o
18 - 25 years
26 - 35 years
36 - 49 years
50 - 60 years
More than 60 years
Student
Housewife
Working Professional
Business
Self Employed
Government service employee
Q4) How many respondents have life insurance policy in their name?
o Yes
o No
Q5) What is the market share of life insurance companies?
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
o
Term assurance
Endowment Plans
Tax saving plans
o Pension Plans
o Child Plans
Q8) Are you aware of the new unit linked insurance plans in the market?
Yes
o No
Q9) How much would you be willing to spend per annum if you were to go
for an investment/insurance plan?
Less than Rs. 6,000
Rs. 6,001 Rs. 10,000
Rs. 10,001 Rs. 25,000
o
o
o
o
21 to 25 years
26 to 30 years
More than 30 years
Whole life policy
o High Returns