Ulink Insur)

ULIP in Insurance Sector
INTRODUCTION
To make comparison of ULIP plans with Mutual funds in Bajaj Allianz Life
Insurance Co. Ltd. and to Create awareness about Unit Linked Insurance
Plan (ULIP) Benefits. The overall goal of this project was to create
awareness about investments. The Above problem arises because every life
insurance company has their products having different positive and negative
aspects.
Life Insurance is booming sector in todays economy. So the responsibilities
of the insurance companies have been increased as compare to the past.
Because in past people were taking insurance policies for protection tool
only. In present scenario insurance sector is providing more services with the
basic life insurance. Bajaj Allianz Life Insurance has number of products,
which gives the right way to save the money and earn good profit by
invested premium. Today people want more services and more return on
their investment. So this insurance company is providing more value
added services with the basic insurance operation.
By doing this type of study in this Insurance sector and looking at the vast
scope and opportunity to study this booming field of Life Insurance and the
growing awareness among the public regarding insuring their life through
Life insurance policies as well as the growing contribution of Insurance in
GDP of country with the number of private players making entrance in this
booming industry of Insurance.
Sydenham College of Commerce and Economics (BBI)
Page 1
OBJECTIVES
To understand the reason for which customers prefer ULIP as one of
the best insurance investment mode rather than Mutual fund.
To find the significance difference between customers of different
income with that of investment mode.
To Compare Investment Options of customers in ULIPs and Mutual
Funds.
LIMITATIONS
The middle class people do not know basic concept of ULIP so
creating awareness is a big challenge for them.
The findings of my research is from a small sample size.
Narrow minded thinking of middle class people as investment is not
their cup of tea.
Many customers are thinking that investment in share market is very
risky. As ULIP and Mutual fund both are related to share market.
A general preference to LIC and SBI over private players.
Page 2
INDIAN INSURANCE INDUSTRY
The history of life insurance in India dates back to 1818 when it was
conceived as a means to provide for English Widows. Interestingly in those
days a higher premium was charged for Indian lives than the non-Indian
lives as Indian lives were considered more riskier for coverage. It was the
first company to charge same premium for both Indian and non-Indian lives.
The Oriental Assurance Company was established in 1880. The General
insurance business in India, on the other hand, can trace its roots to the
Triton (Tital) Insurance Company Limited, the first general insurance
company established in the year 1850 in Calcutta by the British. Till the end
of nineteenth century insurance business was almost entirely in the hands of
overseas companies.Insurance regulation formally began in India with the
passing of the Life Insurance Companies Act of 1912 and the provident fund
Act of 1912. By 1938 there were 176 insurance companies. The first
comprehensive legislation was introduced with the Insurance Act of 1938
that provided strict State Control over insurance business. The insurance
business grew at a faster pace after independence. Indian companies
strengthened their hold on this business but despite the growth that was
witnessed, insurance remained an urban phenomenon.
The Government of India in 1956, brought together over 240 private life
insurers and provident societies under one nationalized monopoly
corporation and Life Insurance Corporation (LIC) was born. Nationalization
was justified on the grounds that it would create much needed funds for
Page 3

rapid industrialization. This was in conformity with the Government's
chosen path of State lead planning and development.The (non-life) insurance
business continued to thrive with the private sector till 1972. Their
operations were restricted to organized trade and industry in large cities. The
general insurance industry was nationalized in 1972. With this, nearly 107
insurers were amalgamated and grouped into four companies- National
Insurance Company, New India Assurance Company, Oriental Insurance
Company and United India Insurance Company. These were subsidiaries of
the General Insurance Company (GIC).The general insurance business was
nationalized after the promulgation of General Insurance Business
(Nationalizations) Act, 1972. The post-nationalization general insurance
business was undertaken by the General Insurance Corporation of India
(GIC) and its 4 subsidiaries: Oriental Insurance Company Limited; New
India Assurance Company Limited; National Insurance Company Limited;
and United India Insurance Company Limited.
INSURANCE MARKET PRESENT

The insurance sector was opened up for private participation seven years
ago. For years now, the private players are active in the liberalized
environment. The insurance market have witnessed dynamic changes which
includes presence of a fairly large number of insurers both life and non-life
segment. Most of the private insurance companies have formed joint venture
partnering well recognized foreign players across the globe.
Page 4
LIFE INSURANCE COMPANIES
Sr. No.
1
2
3
Insurer
HDFC Standard Life Insurance Co.
Ltd.
Standard Life Assurance, UK
ICICI-Prudential Life Insurance
4
5
Co. Ltd.
Om Kotak Life Insurance Co. Ltd.
Birla Sun Life Insurance Co. Ltd.
Tata-AIG Life Insurance Co. Ltd.
SBI Life Insurance Co. Ltd.
ING Vysya Life Insurance Co. Ltd.
Allianz Bajaj Life Insurance Co.

Ltd.
10
Metlife India Insurance Co. Ltd.
11
Reliance Life Insurance Co. Ltd.
12
AVIVA
13
14
Sahara Life Insurance Co. Ltd.

Shriram Life Insurance Co. Ltd.
Bharti AXA Life Insurance Co.
15
16
Ltd.
Future Generali India Life
Foreign Partners
Standard Life Assurance, UK

New York Life, USA
Prudential , UK
Old Mutual, South Africa
Sun Life, Canada
American International Assurance
Co., USA
BNP Paribas Assurance SA, France
ING Insurance International B.V.,
Netherlands
Allianz, Germany
Metlife International Holdings Ltd.,
USA
Aviva International Holdings Ltd.,
UK
Sanlam, South Africa
AXA Holdings, France
Pantaloon Retail Ltd.; Sain
Page 5

Insurance Company Ltd
17
18
19
20
21
IDBI Fortis Life Insurance

Company Ltd.
Canara HSBC OBC Life Insurance
Company Ltd.
Aegon Religare Life Insurance
Company Ltd.
DLF Pramerica Life Insurance Co.
Ltd.
Life Insurance Corporation of India
Marketing Network Pvt. Ltd.

(SMNPL), Generali, Italy
Fortis, Netherlands
HSBC, UK
Religare, Netherlands
Prudential of America, USA
BOOMING INSURANCE MARKET IN INDIA

With a huge population base and large untapped market, insurance industry
is a big opportunity area in India for national as well as foreign investors.
India is the fifth largest life insurance market in the emerging insurance
Page 6

economies globally and is growing at 32-34% annually. This impressive
growth in the market has been driven by liberalization, with new players
significantly enhancing product awareness and promoting consumer
education and information. The strong growth potential of the country has
also made international players to look at the Indian insurance market.
Moreover, saturation of insurance markets in many developed economies
has made the Indian market more attractive for international insurance
players
With the entry of several low-cost airlines, along with fleet expansion
by existing ones and increasing corporate aircraft ownership, the
Indian aviation insurance market is all set to boom in a big way in
coming years.
Home insurance segment is set to achieve a 100% growth as financial
institutions have made home insurance obligatory for housing loan
approvals.
Health insurance is poised to become the second largest business for
non-life insurers after motor insurance in next three years.
A booming life insurance market has propelled the Indian life
insurance agents into the top 10 country list in terms of membership
to the Million Dollar Round
COMPANY PROFILE
Page 7

Bajaj Allianz Life Insurance is a union between Allianz SE, one of the
largest Insurance Company and Bajaj Finserv.
Allianz SE is a leading insurance conglomerate globally and one of the
largest asset managers in the world,managing assets worth over a
Trillion(Over INR 55,00,000 Crores).Allianz SE has over 115 years of
financial experience and is present in over 70 countries around the world.
At Bajaj Allianz Life Insurance, customer delight is the guiding principle.
Their business philosophy is to ensure excellent insurance and investment
solutions by offering customized products, supported by the best technology.
VISION
To be the first choice insurer for customers
To be the preferred employer for staff in the insurance industry.
To be the number one insurer for creating shareholder value.
MISSION
As a responsible, customer focused market leader, we will strive to
understand the insurance needs of the consumers and translate it into
affordable products that deliver value for money.
PRODUCTS PROFILE
Page 8

Unit Linked Plan
New family gain
New unit gain plus
New unit gain premier
Traditional plan
Invest gain
Cash gain
Child gain
Retirement Solutions
Swarna visranthi
New unit gain easy pension plus
Health Plan
Care first
Health care
Term Plan
Risk care
Term care
UNIT LINKED INSURANCE POLICY (ULIP)

Page 9
A unit linked insurance policy is one in which the customer is provided with
a life insurance cover and the premium paid is invested in either debt or
equity products or a combination of the two. In other words, it enables the
buyer to secure some protection for his family in the event of his untimely
death and at the same time provides him an opportunity to earn a return on
his premium paid. In the event of the insured person's untimely death, his
nominees would normally receive an amount that is the higher of the sum
assured (insurance cover) or the value of the units (investments).However,
there are some schemes in which the policyholder receives the sum assured
plus the value of the investments.
Every insurance company has four to five ULIPs with varying investment
options, charges and conditions for withdrawals and surrender. Moreover,
schemes have been tailored to suit different customer profiles and, in that
sense, offer a great deal of choice.
The advantage of ULIP is that since the investments are made for long
periods, the chances of earning a decent return are high.
.
Page 10

Key features
Premiums paid can be single, regular or variable. The payment period too
can be regular or variable. The risk cover (insurance cover) can be increased
or decreased.As in all insurance policies, the risk charge (mortality rate)
varies with age.
However, for an individual the risk charge is always based on the age of the
policyholder in the year of commencement of the policy. These charges are
normally deducted on a monthly basis from the unit value. For instance, if
there is an increase in the value of units due to market conditions, the sum at
risk (sum assured less the value of investments) reduces and so the risk
charges are lower.
The maturity benefit is not typically a fixed amount and the maturity period
can be advanced (early withdrawal) or extended.
Investments can be made in gilt funds (government securities), balanced
funds (part debt, part equity), money-market funds; growth funds (equities)
or bonds (corporate bonds)..
There could be policies that allow the policyholder to remain invested
beyond the maturity period in the event of the maturity value not being
satisfactory.
POINTS TO REMEMBER ABOUT ULIP

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First-year charges: Usually, a minimum of 15 per cent. However, high
premiums attract lower charges and vice versa. Charges can be as high as 70
per cent if the scheme affords a lot of flexibility. Subsequent charges:
Usually lower than first-year charges. However, some insurers charge higher
fees in the initial years and lower them significantly in the subsequent years.
Administration charges: This ranges between Rs 15 per month to Rs 60
per month and is levied by cancellation of units and also depends on the
nature of the scheme.
Risk charges: The charges are broadly comparable across insurers.
Asset management fees: Fund management charges vary from 0.6 per cent
to 0.75 per cent for a money market fund, and around 1.5 per cent for an
equity-oriented scheme. Fund management expenses and the brokerage are
built into the daily net asset value.
Switching charges: Some insurers allow four free switches in every year
but link it to a minimum amount. Others allow just one free switch in each
year and charge Rs 100 for every subsequent switch. Some insurers don't
charge anything.
Top-ups: Usually attracts 1 per cent of the top-up amount. Top-up normally
goes directly into your investment account (units) unless you specifically ask
for an increase in the risk cover.
Surrender value of units: Insurers levy certain charges if the policy is
surrendered prematurely. This levy varies between insurers and could be
around 75 per cent in the first year, 60 per cent in the second year, 40 per
cent in the third year and nil after the fourth year.
Retire unhurt
Page 12

Pension plans are essentially tailored to meet old age financial requirements.
But there are certain advantages in joining a pension plan.
First of all, contribution to pension funds upto Rs 10,000 is eligible for tax
deduction under section 80CCC. In other words, your pension contribution
will get deducted from your taxable income.
HOW DOES ULIP WORK

Sara is a thirty-year old who wants a product that will give her market-linked
returns as well as a life cover. She wants to invest Rs 50,000 a year for 10
years in an equity-based scheme. Based on this premium, the sum assured
works out to Rs 532,000, the exact amount of premium being Rs 50,032.
Based on the current NAV of the plan that Sara chooses to invest in, she is
allotted units in the scheme. Then, units equivalent to the charges are
deducted from his portfolio.
The charges in the first year include a 14 per cent sales charge, an
administration charge (7 per cent for the first Rs 20,000 and 3 per cent for
the remaining Rs 30,000) and underwriting charges, which are deducted
monthly.
Besides, mortality charges or the charges for the life cover are also deducted.
For the remaining nine years a 3.5 per cent sales charge and an
administrative charge of 4 per cent (for the first Rs 20,000 and 2 per cent for
the remaining Rs 30,000) are levied in addition to mortality charges.
Fund management fee of 1.5 per cent (equity) and brokerage are also
charged. This cost is built into the calculation of net asset value.
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On maturity - that is, after 10 years - Sara would receive the sum assured of
Rs 532,000 or the market value of the units whichever is higher.
Assuming the growth rate in the market value of the units to be 6 per cent
per annum Sara would receive Rs 581,500; assuming the growth rate in the
market value of the units to be 10 per cent, Sara would receive Rs 7,24,400.
In case of Sara's untimely death at the end of the ninth year, her
beneficiaries would receive the sum assured of Rs 532,000 or the market
value of the units whichever is higher. Assuming the growth rate in the
market value of units is 6 per cent per annum, the value of investment would
be Rs 510,200.
However, her family will get Rs 532,000 as it is the sum assured.
Assuming a growth rate of 10 per cent per annum, the value of units at the
end of the ninth year would be Rs 621,900. Hence, the beneficiaries would
get Rs 621,900.
ADVANTAGES OF ULIP
Can easily rebalance your risk between equity and debt without any
tax implications.
Best suited for medium risk taking individuals who wish to invest in
equity and debt funds (at least 40% or higher exposure to debt). No
additional tax burden for those investing mainly in debt unlike in
MFs.
Page 14

RISKS ASSOCIATED WITH ULIPS
ULIPS as the name suggests are directly linked with the investments made
by the insured. Though he does not have a direct say in this but he does offer
his choice in the form of investment.
With stock markets soaring high a few months back, ULIPs were offering a
good rate of return, but now with a sudden downfall of the stocks, ULIPs are
bound to become negative investments.
At present, a policy-holder cannot understand the growth of his investments
vis--vis other funds in the market, since there is no benchmark to measure
one fund against the other. Usually a policy-holder could ask his investment
in a ULIP to be, for example, 55 per cent in equity and 45 per cent in debt.
These components can be mixed according to his risk-taking ability. An
investor, therefore, would have to look at quarterly statements, where the
fund would be compared with benchmarks. However, this may not be a true
representation of the NAV, as the ULIP could be a mix of debt, liquid and
equity investments.
The reality is that most of the ULIPs take more than 5 years to break even.
Policies where the costs are 65 per cent and upwards have not even
recovered the principal despite the strongest bull market we have ever
witnessed.
Page 15

MUTUAL FUND
INTRODUCTION OF MUTUAL FUNDS:
A mutual fund is simply a financial intermediary that allows a group of
investors to pool their money together with a predetermined investment
objective. The mutual fund will have a fund manager who is responsible for
investing the pooled money into specific securities (usually stocks or bonds).
When you invest in a mutual fund, you are buying shares (or portions) of the
mutual
fund
and
become
shareholder
of
the
fund.
Mutual funds are one of the best investments ever created because they are
very cost efficient and very easy to invest in (you don't have to figure out
which stocks or bonds to buy).
By pooling money together in a mutual fund, investors can purchase stocks
or bonds with much lower trading costs than if they tried to do it on their
own. But the biggest advantage to mutual funds is diversification.
ACCORDING TO AMFI (ASSOCIATION OF MUTUAL FUND OF
INDIA):
A Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal. The money thus collected is then invested in
capital market instruments such as shares, debentures and other securities.
The income earned through these investments and the capital appreciation
realized is shared by its unit holders in proportion to the number of units
owned by them.
Page 16

Thus a Mutual Fund is the most suitable investment for the common man as
it offers an opportunity to invest in a diversified, professionally managed
basket of securities at a relatively low cost. The flow chart below describes
broadly the working of a mutual fund.
CHARACTERISTICS OF A MUTUAL FUND:

Investors own the mutual fund.
Professional managers manage the affairs for a fee.
The funds are invested in a portfolio of marketable
Securities, reflecting the investment objective.
Value of the portfolio and investors holdings, alters with
Change in market value of investments.
Page 17
ADVANTAGES OF MUTUAL FUNDS:

1. Professional Management: You avail of the services of experienced and
skilled professionals who are backed by a dedicated investment research
team which analyses the performance and prospects of companies and
selects suitable investments to achieve the objectives of the scheme.
2. Diversification: Mutual Funds invest in a number of companies across a
broad cross section of industries and sectors. This diversification reduces the
risk because seldom do all stocks decline at the same time and in the same
proportion.You achieve this diversification through a Mutual Fund with far
less money than you can do on your own..
4. Return Potential: Over a medium to longterm, Mutual Funds have the
potential to provide a higher return as they invest in a diversified basket of
selected securities.
5. LowCosts: Mutual Funds are a relatively less expensive way to invest
compared to directly investing in the capital markets because the benefits of
scale in brokerage, custodial and other fees translate into lower costs for
investors.
Page 18

DISADVANTAGES OF MUTUAL FUNDS:
No Guarantees: No investment is risk free. If the entire stock market
declines in value, the value of mutual fund shares will go down as well, no
matter how balanced the portfolio. Investors encounter fewer risks when
they invest in mutual funds than when they buy and sell stocks on their own.
However, anyone who invests through a mutual fund runs the risk of losing
money.
Fees and commissions: All funds charge administrative fees to cover

their day-to-day expenses. Some funds also charge sales commissions or
"loads" to compensate brokers, financial consultants, or financial planners.
Even if you don't use a broker or other financial adviser, you will pay a sales
commission if you buy shares in a Load Fund.
Taxes: During a typical year, most actively managed mutual funds sell
anywhere from 20 to 70 percent of the securities in their portfolios. If your
fund makes a profit on its sales, you will pay taxes on the income you
receive, even if you reinvest the money you made.
Management risk: When you invest in a mutual fund, you depend on

the fund's manager to make the right decisions regarding the fund's portfolio.
If the manager does not perform as well as you had hoped, you might not
make as much money on your investment as you expected..
A measurement of an option position or premium in relation to the
underlying instrument. In mutual fund also there is certain amount of riskreturn factor associated according to the investment option these are as
follows,
Page 19

RISK
RETURN
Equity
High
High
Balanced
Medium
Medium
Debt
Low
Low
There are equity funds that can be designed to give the investor a high level
of current income along with some steady capital appreciation, investing
mainly in shares of companies with high dividend yields.
Following are the different products and services Offered by

Mutual Fund Companies .
Open ended fund
In an open-ended fund, sale and repurchase of units happen on a
continuous basis, at NAV related prices, from the fund itself.
The corpus of open-ended funds, therefore, changes every day.
Close ended fund
A closed-end fund offers units for sale only in the NFO. It is then
listed in the market.
Investors wanting to buy or sell the units have to do so in the stock
markets. Usually closed-end funds sell at a discount to NAV.
The corpus of a closed-end fund remains unchanged.
Growth fund
Provide capital appreciation over the medium to long-term
Page 20

Investor who does not require periodic income distribution can choose
the option, where the incomes earned are retained in the investment
portfolio and allowed to grow, rather than being distributed to
investors.
Investors with longer investment horizons and limited requirements
for income choose this option.
Income fund
Provide regular and steady income to investor
Balanced fund
Provide both growth and regular income.
Money market fund
Provide easy liquidity, regular income and preserve the income
Tax saving scheme
offer tax rebeats to the under specific provisions of the Indian income
tax laws. Investment made under some schemes are allowed as
deduction U/S 88 of the income tax act .
Systematic Investment Plans( SIP) For regular investment

SIP is investing a fixed sum periodically in a disciplined manner .
It gives benefit of Rupee Cost averaging.
In SIP monthly minimum Rs.500 or Rs.100 are invested.
Interest is calculating compoundly.
Many SIP gives insurance benefits.
VAP is modified version of SIP. It is Voluntary Accumulation Plan. It
allows the investor flexibility with respect to the amount and
frequency of investment In VAP, investor has to impose voluntary self
discipline.
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Systematic Withdrawal Plan ( SWP) For regular income

The lump sum amount is invested for one time and then fixed percent
amount is withdraw monthly.Remaining amount will grow
continuously.This plan is suitable for retired person, because it gives
regular income.
Systematic Transfer Plan ( STP)

Transfer on a periodic basis a specified amount from one scheme to
another within the same fund family.
Dividend option
Investors will receive dividends from the mutual fund , as an and

when dividends are declared.
Dividends are paid in the form of warrants or are directly credited

to the investors bank accounts.
In normal dividend plan , periodicity of dividends is left to the
fund managers, the timing of the dividend payout is decided by
fund manager.
Mutual funds provide the option of receiving dividends at predetermined frequencies,wich can vary from
daily,weekly,monthly,quarterly,half-yearly and annual. Investors
can choose the frequency of dividend distribution that suits their
requirements.
Investors choosing this option have a fixed no. of units invested in
the fund and earned incomes on this investment.
Page 22
COMPARISON OF ULIP VS MUTUAL FUND

Unit Linked Insurance Policies (ULIPs) as an investment avenue are closest
to mutual funds in terms of their structure and functioning. As is the case
with mutual funds, investors in ULIPs are allotted units by the insurance
company and a net asset value (NAV) is declared for the same on a daily
basis.
Similarly ULIP investors have the option of investing across various
schemes similar to the ones found in the mutual funds domain, i.e.
diversified equity funds, balanced funds and debt funds to name a few.
Generally speaking, ULIPs can be termed as mutual fund schemes with an
insurance component.
However it should not be construed that barring the insurance element there
is nothing differentiating mutual funds from ULIPs.
Despite the seemingly comparable structures there are various factors
wherein the two differ.
Page 23
ULIPs vs Mutual Funds
ULIPs
Mutual Funds
Determined by the
investor and can
be modified as
Minimum investment amounts are
Investment amounts well
determined by the fund house
Expenses
No upper limits,
expenses
determined by the Upper limits for expenses chargeable
insurance
to investors have been set by the
company
regulator
Portfolio disclosure
Not mandatory*
Modifying asset
allocation
Generally
permitted for free
or at a nominal
Entry/exit loads have to be borne by
cost
the investor
Tax benefits
Section 80C
benefits are
Section 80C benefits are available
available on all only on investments in tax-saving
ULIP investments funds
Quarterly disclosures are mandatory
Page 24
1. Mode of investment/ investment amounts

Mutual fund investors have the option of either making lump sum
investments or investing using the systematic investment plan (SIP) route
which entails commitments over longer time horizons. The minimum
investment amounts are laid out by the fund house.
ULIP investors also have the choice of investing in a lump sum (single
premium) or using the conventional route, i.e. making premium payments on
an annual, half-yearly, quarterly or monthly basis. In ULIPs, determining the
premium paid is often the starting point for the investment activity.
This is in stark contrast to conventional insurance plans where the sum
assured is the starting point and premiums to be paid are determined
thereafter.
ULIP investors also have the flexibility to alter the premium amounts during
the policy's tenure. For example an individual with access to surplus funds
can enhance the contribution thereby ensuring that his surplus funds are
gainfully invested; conversely an individual faced with a liquidity crunch
has the option of paying a lower amount (the difference being adjusted in the
accumulated value of his ULIP). The freedom to modify premium payments
at one's convenience clearly gives ULIP investors an edge over their mutual
fund counterparts.
Page 25
2. Expenses
In mutual fund investments, expenses charged for various activities like fund
management, sales and marketing, administration among others are subject
to pre-determined upper limits as prescribed by the Securities and Exchange
Board of India.
For
example equity-oriented funds can charge their investors a maximum
of 2.5% per annum on a recurring basis for all their expenses; any expense
above the prescribed limit is borne by the fund house and not the investors.
Similarly funds also charge their investors entry and exit loads (in most
cases, either is applicable). Entry loads are charged at the timing of making
an investment while the exit load is charged at the time of sale.
Insurance companies have a free hand in levying expenses on their ULIP
products with no upper limits being prescribed by the regulator, i.e. the
Insurance Regulatory and Development Authority. This explains the
complex and at times 'unwieldy' expense structures on ULIP offerings. The
only restraint placed is that insurers are required to notify the regulator of all
the expenses that will be charged on their ULIP offerings.
Expenses can have far-reaching consequences on investors since higher
expenses translate into lower amounts being invested and a smaller corpus
being accumulated. ULIP-related expenses have been dealt with in detail in
the article "Understanding ULIP expenses"
Page 26
3. Portfolio disclosure
Mutual fund houses are required to statutorily declare their portfolios on a
quarterly basis, albeit most fund houses do so on a monthly basis. Investors
get the opportunity to see where their monies are being invested and how
they have been managed by studying the portfolio.
There is lack of consensus on whether ULIPs are required to disclose their
portfolios. During our interactions with leading insurers we came across
divergent views on this issue.
Some
insurance
companies
do
declare
their
portfolios
on
monthly/quarterly basis. However the lack of transparency in ULIP

investments could be a cause for concern considering that the amount
invested in insurance policies is essentially meant to provide for
contingencies and for long-term needs like retirement; regular portfolio
disclosures on the other hand can enable investors to make timely
investment decisions.
There is lack of consensus on whether ULIPs are required to disclose their
portfolios. While some insurers claim that disclosing portfolios on a
quarterly basis is mandatory, others state that there is no legal obligation to
do so.
Page 27
4. Flexibility in altering the asset allocation

As was stated earlier, offerings in both the mutual funds segment and ULIPs
segment are largely comparable. For example plans that invest their entire
corpus in equities (diversified equity funds), a 60:40 allotment in equity and
debt instruments (balanced funds) and those investing only in debt
instruments (debt funds) can be found in both ULIPs and mutual funds.
If a mutual fund investor in a diversified equity fund wishes to shift his
corpus into a debt from the same fund house, he could have to bear an exit
load and/or entry load.
On the other hand most insurance companies permit their ULIP inventors to
shift investments across various plans/asset classes either at a nominal or no
cost (usually, a couple of switches are allowed free of charge every year and
a cost has to be borne for additional switches).
Effectively the ULIP investor is given the option to invest across asset
classes as per his convenience in a cost-effective manner.
This can prove to be very useful for investors, for example in a bull market
when the ULIP investor's equity component has appreciated, he can book
profits by simply transferring the requisite amount to a debt-oriented plan.
Page 28
5. Tax benefits
ULIP investments qualify for deductions under Section 80C of the Income
Tax Act. This holds good, irrespective of the nature of the plan chosen by the
investor. On the other hand in the mutual funds domain, only investments in
tax-saving funds (also referred to as equity-linked savings schemes) are
eligible for Section 80C benefits.
Maturity proceeds from ULIPs are tax free. In case of equity-oriented funds
(for example diversified equity funds, balanced funds), if the investments are
held for a period over 12 months, the gains are tax free; conversely
investments sold within a 12-month period attract short-term capital gains
tax @ 10%.
Similarly, debt-oriented funds attract a long-term capital gains tax @ 10%,
while a short-term capital gain is taxed at the investor's marginal tax rate.
Despite the seemingly similar structures evidently both mutual funds and
ULIPs have their unique set of advantages to offer. As always, it is vital for
investors to be aware of the nuances in both offerings and make informed
decisions.
Page 29
DATA INTERPRETATION
AND
ANALYSIS
Page 30
(A) Gender:
Gender
Cumulative
Valid
Male
Female
Total
Frequency
37
13
50
Percent
Valid Percent
74.0
74.0
26.0
100.0
26.0
100.0
Percent
74.0
100.0
INTERPRETATION :
Page 31

The above graph shows that , out of 50 customers, 74% of the respondents
are male policy holders and the rest 26% are female policy holders.
(B) Marital Status:
Marital
Cumulative
Valid
Married
Unmarried
Total
Frequency
33
17
50
Percent
66.0
34.0
100.0
Valid Percent
66.0
34.0
100.0
Percent
66.0
100.0
INTERPRETATION :
From a sample of 50 customers, 66% of the policy holders are unmarried

and the rest 34% of the policy holders are married.
Page 32

C) Age:
Age
Cumulative
Frequency
Valid
20-30
30-40
40-50
50-60
60-70
Total
6
14
17
11
2
50
Percent
12.0
28.0
34.0
22.0
4.0
100.0
Valid Percent
12.0
28.0
34.0
22.0
4.0
100.0
Percent
12.0
40.0
74.0
96.0
100.0
INTERPRETATION :
The graph shows that majority of the sample respondents were in the age
group of 40-50 yrs ie,34%, 12% were in the age group of 20-30 yrs & 28%
of them were 30-40 yrs, 22% were in the age group of 50-60 yrs and 4%
were in the age group of 60-70 yrs.
(D) Occupation:
Page 33

Occupation
Cumulative
Valid
Government
Private service
Business
NRIs
Others
Total
Frequency
18
14
11
3
4
50
Percent
36.0
28.0
22.0
6.0
8.0
100.0
Valid Percent
36.0
28.0
22.0
6.0
8.0
100.0
Percent
36.0
64.0
86.0
92.0
100.0
INTERPRETATION :
The graph shows that majority of the policy holders are working in the
Government sector i.e.36% , 28% of them are engaged service22% of them
are business field, 6% of them are NRIs and 8% of them are engaged.
(E) Annual Income:
Annual income
Page 34

Cumulative
Valid
Below 2 lakhs
2-4 lakhs
4-6 lakhs
6-8 lakhs
Total
Frequency
19
23
6
2
50
Percent
38.0
46.0
12.0
4.0
100.0
Valid Percent
38.0
46.0
12.0
4.0
100.0
Percent
38.0
84.0
96.0
100.0
INTERPRETATION :
The graph shows that 46% of the policy holders get a salary of 2-4 lakhs,
38% of the policy holders get a salary of below 2 lakhs, 12% of the policy
holders get a salary of 4-6 lakhs, 3 of the policy holders get a salary below 2
lakhs and 4% of them above 6-8 lakhs.
1. Sources that helps you in making investment decision.
Sources that helps you in making the investment decisions.

Cumulative
Frequency
Percent
Valid Percent
Percent
Page 35

Valid
Financial journal
Television
Brokers/Agent
Friends
Consultants
Total
5
2
27
13
3
50
10.0
4.0
54.0
26.0
6.0
100.0
10.0
4.0
54.0
26.0
6.0
100.0
10.0
14.0
68.0
94.0
100.0
INTERPRETATION :
From the sample of 50 customers, 54% of the customers are strongly agree
that the agents or brokers helps them to make investment decision, 26% of
the customers point out their friends take part in the investment decision.
2. You generally like to invest money in.
You generally like to invest money.

Cumulative
Valid
Insurance
Stock market
Frequency
13
1
Percent
26.0
2.0
Valid Percent
26.0
2.0
Percent
26.0
28.0
Page 36

Mutual fund
Bank deposit
Both insurance and mutual
6
28
2
12.0
56.0
4.0
12.0
56.0
4.0
fund
Total
50
100.0
100.0
40.0
96.0
100.0
INTERPRETATION :
From a sample of 50 customers, 56% of the customers invest money in bank

deposit, 26% in insurance sector,12% in mutual fund, then 4% in both
insurance and mutual fund,and remaining 2% in stock market.
3. According to you who among the following life insurance company is
best.
According to you who among the following life insurance companies is best.
Cumulative
Valid
Bajaj Allianz
HDFC Standard life
Tata AIG
Aviva Life
SBI Life
Frequency
27
5
4
3
11
Percent
54.0
10.0
8.0
6.0
22.0
Valid Percent
54.0
10.0
8.0
6.0
22.0
Percent
54.0
64.0
72.0
78.0
100.0
Page 37

Total
50
100.0
100.0
INTERPRETATION :
From a sample of 50 customers,54% customers select Bajaj Allianz is the

best insurance company, and 22% customers choose SBI Life,10% select
HDFC,8% for Tata AIG and remaining 6% stands for Aviva life insurance
company.
FINDINGS AND SUGGESTIONS
Unit Linked Insurance Plans (ULIPs) are the creation of the
innovative minds of the insurers in the post reform period. The plan renders
two benefits at the same time investment and safety cover to the insured.
The maximum business of all the life insurers is coming out of the
sales of these products now days. The responsibility of the insurer is very
Page 38

limited in this type of insurance agreement, but lured by high growth
opportunities in the investment, the customers go for them.
But there must be transparency in functioning of the life insurers and
product must be economical for the customers. The plan should not be
focused on urban areas and rich customersonly, rather they should also take
care the rural folks who are poor, as India is a rural country whose
approximately two third population lives in villages.
If the shortcoming shown by the study are removed from the products
by the insurers, they van become more effective and will be benefited by
them. The regulators should see to it that more transparency should be
brought out as far as the different types of expenses relating to the plans are
concerned in the interest of the policyholders
CONCLUSION AND RECOMMENDATIONS

Awareness of ULIP is increasing as more number of private players are
entering in life insurance industry.
Mutual Fund is also getting more and more famous in Indian market as
many private companies innovating new funds as the investors demand.
ULIP differentiate from Mutual fund in respect of Insurance cover.
Page 39

Investors in Bajaj Allianz Life ULIP will be getting the advantage of life
insurance cover.
People are turning towords the ULIP as a good investment option but as
ULIP is in its starting phase so customers are preferring only big brands.
Mutual fund is having good growth but many customers from rural areas
dont have any knowledge about Mutual fund.They think it is very risky.
There is a need for insurers to undertake a demand audit in order to
understand what the policyholder wants and needs.
Deriving the right feedback from customers and bringing out innovative
products which cater to customer demands will go a long way in tapping
the market potential of the insurance and Mutual fund sector.
For Bajaj Allianz Life Insurance They should go for creating more
awareness about its ULIP as now also people are just investing because
Bajaj is Indias most Known.
BIBLIOGRAPHY
REFERENCE:
1)
Research Methodology, C.R Kothari, 2nd edition
2) Outlook Money, 15 May 2005, ULIP Mania.

Page 40
3) The Business Line, 10 June 2007, Know all About ULIPS.
WEBILOGRAPHY
www.irdaindia.gov
www.bajajallianzlife.co.in
www.quickmba.com
www.amfindia.com
www.mba.com
www.articlebase.com
QUESTIONNAIRE
I am RASHMI B PATTANAIK student of T.Y.B.Com (Banking &
Insurance) doing a project on ULIP in Insurance Sector and this
questionnaire is a part of the project and the information collected
through this questionnaire would be used only for academic purposes
and strictly confidential.
Page 41

PERSONNAL INFORMATION
1. Name:
2. Gender:
(a) Male
(a) Female
3. Marital status:
(a) Married
(b) Unmarried
4. Age:
(a) 20-30
(b) 30-40
(c) 40-50
(d) 50-60
(e) 60-70
5. Occupation:
(a) Government
(b) Private Service
(c) Business
(d) NRIs
(e) Others
6. Annual Income:
Page 42

(a) Below 2 lakhs
(c) 4- 6 lakhs
(b) 2-4 lakhs

(d) 6-8 lakhs
(e) Above 8 lakhs

1. Sources that helps you in making the investment decisions.
(a) Financial journal
(b) Television
(c) Brokers or agents
(d) Friends
(e) Consultants
2. Factors that influence your investment decisions in a particular
company.
(a) Attractive schemes
(b) Tax benefits
(c) High reputation
(d) Rate of return
(e) Variety of products
3. You generally like to invest money.

(a) Insurance
(b) Stock Market
(c) Mutual Fund
(d) Bank deposits
(e) Both insurance and mutual fund

4. According to you who among the following Life Insurance
companies is best.
Page 43

(a) BAJAJ ALLIANZ
(c) TATA AIG
(b) HDFC STANDARDLIFE

(d) AVIVA LIFE INSURANCE
(e) SBI LIFE
5. How would you rate our products.

(a) Excellent
(b) Good
(c) Fair
(d) Poor
(e) Very poor
Page 44

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ULIP in Insurance Sector

Sydenham College of Commerce and Economics (BBI)

ULIP in Insurance Sector

Sydenham College of Commerce and Economics (BBI)

ULIP in Insurance Sector

INDIAN INSURANCE INDUSTRY

ULIP in Insurance Sector

INSURANCE MARKET PRESENT

Sydenham College of Commerce and Economics (BBI)

ULIP in Insurance Sector

LIFE INSURANCE COMPANIES

Tata-AIG Life Insurance Co. Ltd.

SBI Life Insurance Co. Ltd.

ING Vysya Life Insurance Co. Ltd.

Allianz Bajaj Life Insurance Co.

Metlife India Insurance Co. Ltd.

Reliance Life Insurance Co. Ltd.

Sahara Life Insurance Co. Ltd.

Standard Life Assurance, UK

Sydenham College of Commerce and Economics (BBI)

ULIP in Insurance Sector

IDBI Fortis Life Insurance

Marketing Network Pvt. Ltd.

BOOMING INSURANCE MARKET IN INDIA

ULIP in Insurance Sector

Sydenham College of Commerce and Economics (BBI)

ULIP in Insurance Sector

Sydenham College of Commerce and Economics (BBI)

ULIP in Insurance Sector

UNIT LINKED INSURANCE POLICY (ULIP)

ULIP in Insurance Sector

Sydenham College of Commerce and Economics (BBI)

ULIP in Insurance Sector

POINTS TO REMEMBER ABOUT ULIP

ULIP in Insurance Sector

ULIP in Insurance Sector

HOW DOES ULIP WORK

Sydenham College of Commerce and Economics (BBI)

ULIP in Insurance Sector

Sydenham College of Commerce and Economics (BBI)

ULIP in Insurance Sector

Sydenham College of Commerce and Economics (BBI)

ULIP in Insurance Sector

Sydenham College of Commerce and Economics (BBI)

ULIP in Insurance Sector

CHARACTERISTICS OF A MUTUAL FUND:

Sydenham College of Commerce and Economics (BBI)

ULIP in Insurance Sector

ADVANTAGES OF MUTUAL FUNDS:

Sydenham College of Commerce and Economics (BBI)

ULIP in Insurance Sector

Fees and commissions: All funds charge administrative fees to cover

Management risk: When you invest in a mutual fund, you depend on

Sydenham College of Commerce and Economics (BBI)

ULIP in Insurance Sector

Following are the different products and services Offered by

ULIP in Insurance Sector

Systematic Investment Plans( SIP) For regular investment

Sydenham College of Commerce and Economics (BBI)

ULIP in Insurance Sector

Systematic Withdrawal Plan ( SWP) For regular income

Systematic Transfer Plan ( STP)

Investors will receive dividends from the mutual fund , as an and

Dividends are paid in the form of warrants or are directly credited