RESEARCH PROJECT

On

"Comparative analysis of ULIPS in India"

Submitted in partial fulfillment of the requirement for MBA Degree of
Bangalore University
BY

Nandha Kishore.D
Registration Number: 04XQCM6059

Under the guidance of

Dr.N.S.MALLAVALLI

M.P.Birla Institute of Management Associate

Bharatiya Vidya Bhavan
Bangalore-560001 2004-2006

Comparative analysis of ULIPS in India

DECLARATION

I hereby declare that the research project titled "Comparative analysis of ULIPS in India" is prepared
under the guidance of Dr.N.S.MALLAVALLI in partial fulfillment of MBA degree of Bangalore
University, and is my original work.
This project does not form a part of any report submitted for degree or diploma under Bangalore
University or any other university.

Place: Bangalore

MM. P. Birla Institute of Management

Nandha Kisho

PRINCIPAL'S CERTIFICATE

This is to certify that Mr. Nandha Kishore.D, bearing Registration No: 04XQCM6059 has done a
research project on "Comparative analysis of ULIPS in India" under the guidance of
Dr.N.S.MALLAVALLI M.P. Birla Institute of Management, Bangalore. This has not formed a basis for
the award of any degree/diploma for any other university.

Place: Bangalore
Date:
MPBIM, Bangalore

GUIDE'S CERTIFICATE

Dr.N.S.MALLAVALLI
PRINCIPAL

I hereby declare that the research work embodied in this dissertation entitled "Comparative analysis of
ULIPS in India" has been undertaken and completed by Mr. Nandha Kishore.D under my guidance
and supervision.

I also certify that he has fulfilled all the requirements under the covenant governing the submission of
dissertation to the Bangalore University for the award of MBA Degree.

Place: Bangalore
Date:
Dr.N.S.MALLAV
ALLI
Research
MPBIM,
Bangalore

Guide

ACKNOWLEDGEMENT

The successful accomplishment of any task is incomplete without acknowledging the contributing
personalities who both assisted and inspired and lead us to visualize the things that turn them into
successful stories for our successors.
First of all I thank the Almighty God for his grace bestowed on us throughout this project.
My special thanks to my project Guide Dr.N.S.MALLAVALLI, who guided me with the timely advice
and expertise and has helped remarkably to complete the project.

Last, but not the least, I would like to thank my Parents and all my aFriends for their wholehearted
direct and indirect support and encouragement.

Nandha Kishore.D

ABSTRACT

The Life Insurance sector in India is growing at a very high rate through the Unit Linked Insurance
Plan (ULIPs). Most of the Life Insurance companies grow more than 100% every year all through
ULIPs. In this study we have compared the ULIP's products of five leading Insurance companies,
which are hot selling products at present and also we have concentrated on the ranking of those
companies based on the some criteria like:

1. Minimum premium contribution

2. Minimum Term
3. Charges
4. Agents Commission
5. Returns from 11-01-05 to 11-05-05
6. Returns since inception

Net Asset Value for all those five companies is collected. Considering an investor wants to invest
Rs.5000 every month, the charges and fund management between each and every companies will
vary. After deduction of those charges what returns will an investor will get if he invest that amount in
any of those five companies. (i.e.,)

1. ICICI Prudential
2. SBI Life
3. HDFC Standard Life
4. TATA AIG
5. BAJAJ Allianz.

INTRODUCTION
Indian insurance sector with the initiation of the deregulation created a tremendous change in the last
6 years; The monopoly of big public sector companies in life insurance as well as general (non-life
insurance) has been broken. . Indian insurance industry showed an annual growth rate of 15-20% and the
largest number of life insurance policies in force..

New private players have entered the market and with

their innovative approaches and better use of distribution channels and technology. They are grabbing
the market share of established public sector companies in Indian Insurance Market. Since the
deregulation has been put in to place, the market share of Life Insurance Corporation of India has
come down to 71.4% in life insurance sector. Total value of the Indian insurance market (2004-05) is
estimated at Rs. 450 billion. According to government sources, the insurance and banking services' contribution
to the country's gross domestic product (GDP) is 7% out of which the gross premium collection forms a
significant part.

Till date, only 20% of the total insurable population of India is covered under various life insurance
schemes, the penetration rates of health and other non-life insurances in India is also well below the
international level. These facts indicate the of immense growth potential of the insurance sector. In
order to meet the competition, these private companies are coming with new strategies and innovative
products.
The introduction of unit-linked insurance plans (ULIPs) has possibly been the single-largest
innovation in the field of life insurance. In a swoop, it has addressed and overcome several concerns
that customers had about life insurance - liquidity, flexibility and transparency and the lack thereof.
In this study I am trying to do a comparative analysis of the different hot selling UNIT LINKED
PLANS (ULIPs) which is available in India, on the basis of their performance using different
criteria's like premium contribution, term, charges etc.
UNIT LINKED INSURANCE PLAN
ULIP is the innovative insurance product launched by ICICI PRUDENTIAL in India on 24-11-01.
Earlier only Endowment plans were there in Insurance companies for savings and investment
purposes.
Most insurers in the year 2004 have started offering at least a few unit-linked plans. Unit-linked life
insurance products are those where the benefits are expressed in terms of number of units and unit
price. They can be viewed as a combination of insurance and mutual funds.

The number of units that a customer would get would depend on the unit price when he pays his
premium. The daily unit price is based on the market value of the underlying assets (equities, bonds,
government securities, etc) and computed from the net asset value.
The advantage of unit-linked plans is that they are simple, clear, and easy to understand. Being
transparent the policyholder gets the entire upside on the performance of his fund. Besides all the
advantages they offer to the customers, unit-linked plans also lead to an efficient utilization of capital.
Unit-linked products are exempted from tax and they provide life insurance. Investors welcome these
products as they provide capital appreciation even as the yields on government securities have fallen
below 6 per cent, which has made the insurers slash payouts .
According to the IRDA, a company offering unit-linked plans must give the investor an option to
choose among debt, balanced and equity funds. If you opt for a unit-linked endowment policy, you
can choose to invest your premiums in debt, balanced or equity plans.
If customer chooses a debt plan, the majority of his premiums will get invested in debt securities like
gilts and bonds. If he chooses equity, then a major portion of his premiums will be invested in the
equity market. Customer chooses the plan according to his risk profile and investment need.
The ideal time to buy a unit-linked plan is when one can expect long-term growth ahead. This is
especially so if one also believes that current market values (stock valuations) are relatively low.
So if investor opts for a plan that invests primarily in equity, the buzzing market could lead to windfall
returns. However, should the buzz die down, investors could be left stung.
WHY

OFFER

UNIT-LINKED

POLICIES?

GENERAL CONSIDERATIONS

A product will only provide good sales volumes in a market if it meets the requirements of the parties
involved in the transaction. For an insurance product, this means meeting the requirements of the
client, the distributor (assumed to be an intermediary) and the insurer. In this section we look at how a
unit-linked policy meets the needs of the three parties.

2. THE CLIENT

Smoothing of investment returns on conventional policies has been reduced as actuaries, through
competitive Unit-linked policies can be designed to do almost anything a conventional policy can, but
they can also offer more flexibility. The notable exception is achieving the smoothing of investment
returns which was traditionally the objective of conventional policies.

Over the years, the pressures have increased the terminal bonus element of maturity payouts. The
volatility of investment returns under conventional policies has therefore increased and the main
perceived advantage of such policies has diminished.

The major disadvantage of conventional policies lies in their bundled nature and, in particular, that the
cash value of the policy at a particular time is not clear to the client. The transparent nature of a unitlinked policy has a major appeal to clients who wish to monitor the progress of the value of their
investment. This has enabled single premium life insurance policies to compete successfully with
mutual funds and other open-ended collective investment schemes.
Further advantages of unit-linking are that the client has control over the investment strategy for the
policy and may be more comfortable with unit linking as the concept is closer to other collective
investment vehicles than a conventional policy. Notably, clients may control the degree of investment
risk by directing premiums to the funds most appropriate in relation to their risk tolerance. Those
clients willing to take on more risk, for example by investing solely in an equity share fund, would
expect to earn better returns over the long term.

3. THE INTERMEDIARY

The transparency and flexibility of unit-linked policies provide the intermediary with products that
meet a wide variety of client needs and which are easy to explain (in principle) to clients, particularly
in terms of demonstrating investment performance compared to that of competitors. It is also possible
for the intermediary to show how unit-linked contracts have the potential to outperform their
conventional with-profits counterparts based on past performance.
In general, the maturity values of unit-linked policies invested in managed or balanced funds where
the underlying investments are a mix of shares, bonds, property and cash should be similar to the
maturity value of a conventional with-profits policy. The maturity values of unit-linked plans invested
in equity share funds would be expected to be higher. In practice, results have varied considerably
between insurers depending on their relative investment performance.

In addition, where the intermediary is acting as the client's investment adviser, the regular requirement
to review the investment strategy for the policy with the client gives the intermediary a reason to
contact the client with the possibility of further sales as a consequence of the meeting. The quality of

unit-linked business should be better than that of conventional business, in terms of persistency, for
this reason.
U S E S O F U N I T- L I N K E D P R O D U C T S
To date, unit-linked products have been structured in many different ways:

I. Endowment assurances
II. Open-ended whole life policies

III.

Savings for retirement (deferred pensions)

IV.

Pensions in payment

Many of these offer the choice of

I. Single or regular (monthly, annual or other) premiums II. Flexible
premiums III. A single or a multiple life basis

A range of covers that can be added (depending on local licensing regulations), e.g.

I. Life cover
II. Guaranteed insurability options

III.

Critical illness

IV.

Disability

V. Health
VI.

Long

term

care

VII. Redundancy
These products can be applied in a wide variety of situations.
I. Personal lines
II. Family protection
III.

Mortgage or loan repayment

IV.Inheritance

or

estate

tax

V. Lump-sum investment
VI. Saving for retirement
VII. Saving for school or college fees

planning

VIII. Drawing retirement income

IX. Charitable giving
X. Business lines
XI. Key person insurance
XII. Partnership buy-sell agreements
XIII.

Other partnership situations

XIV. Employee
XV.

pension

and

other

benefits

Executive benefits

Of course, none of this is new just because a unit-linked policy is involved.

The main points really are:
I. Unit-linked policies can satisfy the same needs as conventional policies.

II. Unit-linked policies are easy for the intermediary to explain and easy for the client to understand.
Of course, the actual level of understanding of the average client will still be very low, but will
nonetheless be better than for typical conventional policies.
III. The flexibility and choices under unit-linked policies enable clients to choose the insurance
coverages they require and to control the level of investment risk associated with the policy.
1. THE INSURER
The insurer should only offer unit-linked products in response to a demand from the market or where
it is believed that market conditions will support unit linked innovation and where it can make a
sufficient profit. Clear indications of where unit-linked plans may be successful are flat or stagnating
sales of traditional with profits products, and increases in sales of pure investment linked trusts (or
mutual funds). Offering unit-linked insurance would be a method to retain existing customers or
attract new customers who may otherwise purchase pure protection insurance (term insurance) and
place their savings in investment-linked trusts or other pure investments.

Unit-linked policies are usually less capital intensive than conventional with profits policies, i.e. the
finance required to support equal volumes of with profits and unit-linked business is lower for unitlinked business. There are two main reasons for this:

I. The guarantees under unit-linked business are usually much weaker than under a conventional withprofits policy (if they exist at all).

II. The reserving requirements under a unit-linked policy are much less onerous than under a
conventional with-profits policy. This partly reflects the weaker guarantees but is mainly a result of
using a valuation basis under which the reserve is roughly equal to the surrender value at all times.
The lower capital requirement for unit-linked business means that unit-linked products are suitable
products for insurers in start-up situations. In countries where bancassurance has been successful, the
bancassurers have often started by selling unit-linked products. In some cases, insurers have
responded to competition from the bancassurers by introducing unit-linked products themselves.

Unit-linked policies are often more profitable than conventional with-profits policies, particularly for
proprietary life offices. The reason for this is that many proprietary life offices operate a 90/10 (or
other split) gate within their life fund.

This means that at least 90% of the profits of the business must go to the with profits policyholders,
and the shareholders take a maximum of 10%. The requirement to split the profits in this way is
written into the Memorandum and Articles of Association of the insurer (the basic documents
governing its operations) and would be virtually impossible to circumvent. In some cases, the
requirement to split the profits relates only to the profits arising from with profits business, but often
the requirement covers profits arising from non-profit business as well. Non-profit business could
include unit-linked business.

However, by writing unit-linked business in a separate fund or even a separate company, the
requirement to distribute any profits arising from the business to anyone other than the shareholders is
removed.

Insurers will need to decide whether to write unit-linked business either

I. In the existing life fund with segregated assets; II. In a separate fund

containing unit-linked assets only; III. In a separate company.

Comparative analysis of ULIPS in India

CRITICAL SUCCESS FACTORS FOR UNIT-LINKED BUSINESS

1. E F F I C I E N T I N V E S T M E N T M A R K E T S
A key area in which a unit-linked policy differs from a conventional with-profits policy is that the
investments of the unit-linked policy should be able to be valued at any point in time. This means that
a price for the individual investments of a unit-linked fund should be available at any time, i.e.
efficient investment markets. This covers not only share markets but also government bond markets,
corporate bond markets and (as far as possible) property markets.

2 . A D E M A N D F O R T R A N S PAR E N T I N V E S T M E N T S
In markets where shares, bonds and property are popular investment media, there is a predisposition
towards investments that can be easily valued. This weighs heavily in favor of a unit-linked policy
rather than a conventional policy.

3 . A W E L L - D E V E L O P E D L I F E I N S U R A N C E M A R K E T A well-developed life
insurance market can be characterized by the following:

A need for protection and savings

A stable economic background
Consumer wealth
A sophisticated banking system able to process mass transactions
An advanced supervision system which allows the introduction of new classes of business
Trust in financial services institutions
A taxation regime that does not disadvantage life insurance in general or unit-linked life insurance
in particular

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Comparative analysis of ULIPS in India

4 . A D E Q U ATE S Y S T E M S

The flexibility of unit-linked products means that there can be a large number of options as to how the
policy is put together. There are options regarding the choice of add-on insurance benefits, the term of
the policy and whether the cash value is payable as part of the sum insured or in addition to the sum
insured on the occurrence of the insured event. This means that complex point of- sale illustration
systems are required to support unit-linked products.

Once written, unit-linked policies are complex from a record-keeping point of view, as, there are large
amounts of data required to be held and large numbers of transactions to be processed. A powerful and
efficient administration system is needed to manage a unit-linked portfolio.

5 . AVI A L A B L E

DISTRIBUTION

SYSTEM

Access to the market through one or more of the following:

A tied sales force - well trained, well paid and well motivated
A reliable independent sales network
Another financial services organization (e.g. a bank)
Other direct access to the market (direct response or other distribution agreements with third
parties)
6. A GOOD INVESTMENT TRACK RECORD
To be successful in the unit-linked market, an insurer must be able to demonstrate a good history of
investment performance. For a new entrant to the unit-linked market, this is clearly impossible
(unless, for example, it relies on tracker funds which replicate the performance of well-known stock
indices) and the insurer must rely on its reputation in the market or else rely on someone else's track
record. This is often done by using external fund managers to manage the investments, or by investing

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Comparative analysis of ULIPS in India

in funds managed by another fund manager. In either case, the pedigree of the external fund manager
becomes part of the marketing message.

PRODUCT DESIGN AND PRICING

I . P R O D U C T D E S I G N ( T E C H N I C A L S P E C I F I C ATI O N )

The product specification should include (where relevant):

1.1 CLASS OF PRODUCT

1. The technical class of product - e.g. whole life, endowment, pension

2. Versions available - single life, joint life (first death, last survivor), business
3. Premium options - single, regular, flexible
4. Allowable insurance benefit add-ons

1.2 INVESTMENTS
I. Fund links available and invest ment objectives of each fund
II.

Invest ment guarantees (or lack of invest ment guarantees)

III. Method and frequency of unit pricing

I V.

T he invest ment accounting and manage me nt s yste m to be used

1.3 MARKETING AND DISTRIBUTION

The distribution channels through which the product is available

1. Variations of product design by distribution channel, if any

2. The initial and renewal commission payable and clawback rules
3. Capabilities of illustration system to be used
4. Marketing material to be available
5. Other sales aids to be available
6. Training and qualification standards of unit-linked insurance intermediaries
1.4 ACTUARIAL AND TECHNICAL

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Comparative analysis of ULIPS in India

1. Charging structure
2. Insurance benefit charges
3. Review provisions (if relevant)
4. Policy limits (age limits, maximum and minimum premiums/sums insured, minimum investment
in individual funds, fund link rules, rules for fund switches, etc.)

5. Underwriting rules
6. Management and statistical information required
7. Valuation and reserving bases
8. Solvency margin requirements
9. Corporate tax implications
10.

Policyholder tax implications

1 . 5 A D M I N I S T R ATI O N

1. Business processing rules - new and ongoing business

2. processing rules - allocation of cash to policies, late Policy and endorsement wordings
3. Cash processing rules
4. Permitted policy changes (by the insurer and by the client)
1. Availability of loans and/or partial withdrawals and the rules for administering them
5. Non-forfeiture provisions
1 . 6 O T H E R S P E C I F I C ATI O N S R E Q U I R E D

1. Administration system specification

2. Investment accounting and management system specification
3. Illustrations system specification
4. Management information system specification
2. PRODUCT PRICING

This means the level and type of charges that the insurer can take under the policy. The types of
charge, which can be levied, are initial charges, surrender charges, renewal charges, fund management
charges, and switch or redirection charges.

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Comparative analysis of ULIPS in India

In addition, charges are taken for add-on benefits if the premium for such benefits is not included in
the total premium payable.

a. INITIAL CHARGES
Initial charges are intended to cover the marketing, distribution and other new business costs relating
to the policy. There are many different variations of initial charges, but essentially, whatever method
is used, the effect is that less money is actually allocated to the policy than is received from the client
for a period of time. Some possible ways of doing this are:

b. Allocate no money to the policy for a period of months.

c. Allocate

only

proportion

of

each

premium

to

the

policy

for

period

of

months.
d. Allocate money received in the early months of a policy to units that have a
higher fund management charge than those purchased by later premiums.
e. In

the

event

management
levied

on

excess

fund

policy
purchase

of

charges,
these

runs
the

the
in

units,

management
its

full

units

policy

excess
are

or
of

surrendered,

of

the

regular

levied

at

the

charges

term
net

being

will

not,
the

be

and

only

excess

fund

the

charges

point

of

received
the

future

that

amount

of

management

fund

have

been

would

surrender.
regardless

excess

As
of

money

charges

such,

the

whether

the

required

needs

to

to
be

allocated to the policy.

f. SURRENDER CHARGES
Surrender charges (also called surrender penalties or back-end charges) are, as their name suggests,
applied when a policy is surrendered. They are used to recover costs already incurred to the extent
that they have not been recovered from the charges made prior to surrender.

g . R E N E WAL C H A R G E S
These are intended to cover the ongoing costs of administering the policy and any renewal
commissions payable. There are various methods of taking renewal charges :

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Comparative analysis of ULIPS in India

I. An explicit percentage of each premium

II. A policy fee deducted from the premium before it is allocated to units

III.

A policy fee deducted from the funds under management

IV.

A bid/offer spread, whereby the price at which units are bought by clients is higher than the

price at which the insurer will redeem them.

For example, units may be sold at 100 and redeemed at 95 (redeemed in the case of surrenders, partial
withdrawals, or to pay certain charges). Both the bid price and the offer price of the units will change
over time to reflect the performance of the underlying investments and other factors, but the spread
between these prices will usually remain within certain bounds established in the insurance contract,
often close to a constant percentage such as 5%.
. FUND MANAGEMENT CHARGES
These are intended to cover the ongoing costs of managing the investments of the policy and any asset
or trail commissions payable. These charges are almost always a percentage of the funds under
management.

i. SWITCH OR REDIRECTION CHARGES

These cover the additional administration costs associated with switching investments between funds
and redirecting premiums. The objective of these charges is to discourage excessively frequent
switches and premium redirections but often a number of free switches is allowed. Usually there is no
charge for redirection of premiums.

j. ADD-ON BENEFIT CHARGES

These are usually calculated using a current cost method (unless the premium for add-on benefits is
included in the total premium). This means that risk premium rates are applied each month to the sum
at risk under each benefit. Any charge over and above the pure risk premium charge will help offset
expenses.

3 . P R O F I TAB I L I T Y
Some assumptions about the future must be made to price the product profitably. These are:

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Comparative analysis of ULIPS in India

The average size of policy the office expects to write, (i.e. the average premium and level of benefits),
including the timing of premiums and charges for fully flexible policies. These averages may be
related to age, sex and other factors such as the distribution channel.
The expected costs for the product. They should be what the company thinks it needs to spend to
acquire and administer the product. This should include overhead (or indirect) costs. The amounts
might be divided into initial and renewal costs and might be related to premiums, benefits or simply to
each policy. In order to allocate expenses at the policy level, sales volumes will have to be estimated.

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Comparative analysis of ULIPS in India

Any expected increases in these amounts, due to inflation or other factors, should also be considered.
Economic assumptions such as future returns on unit-linked and other funds, future inflation rates,
future tax rates and rules.
Lapse assumptions - calculated in accordance with the time since the policy was written and (if
possible) with age, distribution method or other factors.
The expected death and other benefit claim rates. These are not necessarily the same as the charges for
the benefits.
The valuation method for the policy liabilities (or the reserves) and the need for any solvency margin.
These will be in accordance with the rules laid down by the appropriate supervisory authorities.
These assumptions need to be based on good information. The best information is the experience of
similar existing policies. If such information does not exist (or is not available), research will be
necessary.

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Comparative analysis of ULIPS in India

Problem Statement:

Investors are being confused because many insurance companies approach and explain that their
product is better than other companies' product. They have been explained only about the NAV returns
and not the actual returns what they (investors) will receive after amortizing the charges.

Objective:

To compare the hot selling Unit linked plans in India and to suggest the customers which company is
giving better returns by ranking them.
Awareness of Life Insurance is being created among the people. Standard of life is increasing day-byday; many people tend to cover their risk associated with their life by taking Insurance for their life.
People are expecting high returns from ULIPs. Since ULIPs are hot selling product in Life Insurance
Industry, contributing more than 70 % of the premium collected by each company per year.

Data Type:

The data used for the study is Secondary data. Source:

I. Insurance company brochures II. Irdaindia.org

Sample size:
A sample of 5 leading Life insurance companies, whose ULIPs are popular in the market has been
taken for the study.

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Comparative analysis of ULIPS in India

Methodology:

Fixing a certain amount of premium contribution of an investor in monthly mode (Rs.5000) and after
deduction of charges, remaining amount will be converted into units by dividing with present day
NAV.

Total value of units = total number of units * present NAV

Returns % =100* (Total value of units - Total Investment)/ Total Investment

Limitations:
I. Only five Life Insurance companies have been considered for the study.

II. Risk (death) cover charges are not considered.

III. Only first two years of investment charges are taken for ranking.

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Comparative analysis of ULIPS in India

SBI LIFE INSURANCE:

SBI Life Insurance is a joint venture between the State Bank of India and Cardif of France. SBI Life
Insurance is registered with an authorized capital of Rs 500 crore and a paid up capital of Rs 350
crores. SBI owns 74% of the total capital and Cardif the remaining 26%.
State Bank of India enjoys the largest banking franchise in India. Along with its 7 Associate Banks,
SBI Group has the unrivalled strength of over 14,000 branches across the country, the largest in the
world.
Cardif is a wholly owned subsidiary of BNP Paribas, which is The Euro Zone's leading Bank. BNP is
one of the oldest foreign banks with a presence in India dating back to 1860. It has 9 branches in the
metros and other major towns in the country.
Cardif is a vibrant insurance company specializing in personal lines such as long-term savings,
protection products and creditor insurance. Cardif has also been a pioneer in the art of selling
insurance products through commercial banks in France and 29 more countries.
The company plans to make the insurance buying process quick, simple and based on well-informed
judgment. In 2004, SBI Life Insurance became the first company amongst private insurance players to
cover 30 lakh lives.
The company expects to carve a niche in the Indian insurance market through extensive product
innovation and aims to provide the highest standards of customer service through a technological
interface. To facilitate this, call centers has been installed. Help lines will also be installed and
customers will have access to their accounts through the Internet or through SBI branches.

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Comparative analysis of ULIPS in India

The company proposes to make available ready liquidity to its Life Insurance policies by way of loans
at SBI counters. This will make Life Insurance a liquid asset in the financial portfolio of households.
SBI Life Insurance is uniquely placed as a pioneer to usher banc assurance into India. The company
hopes to extensively utilize the SBI Group as a platform for cross-selling insurance products, along
with its numerous banking product packages such as housing loans, personal loans and credit cards.
SBI's access to over 100 million accounts provides a vibrant base to build insurance selling across
every region and economic strata in the country.

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BAJAJ ALLIANZ:
Bajaj Allianz Life Insurance Co. Ltd. Is a joint venture between two leading conglomerates- Allianz
AG, one of the world's largest insurance companies and Bajaj Auto, one of the biggest 2 and 3
wheeler manufacturers in the world.
Bajaj Allianz Life Insurance:
I. Is the fastest growing private life insurance company in India II.
Currently has over 4,40,000 satisfied customers
III. We have a presence in more than 550 locations with 60,000 Insurance Consultants providing
the finest customer service.
One of India's leading private life insurance companies Bajaj Auto Ltd, the flagship company of the
Rs. 8000 crore Bajaj group is the largest manufacturer of two-wheelers and three-wheelers in India
and one of the largest in the world.
A household name in India, Bajaj Auto has a strong brand image & brand loyalty synonymous with
quality & customer focus.
A STRONG INDIAN BRAND- HAMARA BAJAJ
One of the largest 2 & 3 wheeler manufacturers in the world. 21 million plus vehicles on the roads
across the globe. Managing funds of over Rs. 4000 cr. Bajaj Auto finance is one of the largest auto
finance companies in India. Rs. 4,744 Cr. Turnover & Profits of 538 Cr. n 2002-03. It has joined
hands with Allianz to provide the Indian consumers with a distinct option in terms of life insurance
products.
As a promoter of Bajaj Allianz Life Insurance Co. Ltd., Bajaj Auto has the following to offer -

I. Financial strength and stability to support the Insurance Business.

II. A strong brand-equity.
III. A good market reputation as a world-class organization.
IV. An extensive distribution network.
V. Adequate experience of running a large organization

M7- P- Birla Institute of Management

Comparative analysis of ULIPS in India

ALLIANZ GROUP
Allianz Group is one of the world's leading insurers and financial services providers. Founded in 1890
in Berlin, Allianz is now present in over 70 countries with almost 174,000 employees. At the top of
the international group is the holding company, Allianz AG, with its head office in Munich.
Allianz Group provides its more than 60 million customers worldwide with a comprehensive range of
services in the areas of

I. Property and Casualty Insurance,

II. Life and Health Insurance,
III. Asset Management and Banking.
ALLIANZ AG- A GLOBAL FINANCIAL POWERHOUSE
I. Worldwide 2nd by Gross Written Premiums - Rs.4,46,654 cr. II. 3rd largest Assets Under
Management (AUM) & largest amongst Insurance cos. - AUM of Rs.51,96,959 cr.

III. 12th largest corporation in the world

IV. 49.8 % of global business from Life Insurance
V. Established in 1890, 110 yrs of Insurance expertise VI. 70 countries,
173,750 employees worldwide
INDIAN OPERATIONS
Growing at a breakneck pace with a strong pan Indian presence Bajaj Allianz has emerged as a strong
player in India...
Bajaj Allianz Life Insurance Company Limited is a joint venture between two leading conglomerates
Allianz AG and Bajaj Auto Limited. Characterized by global presence with a local focus and driven
by customer orientation to establish high earnings potential and financial strength, Bajaj Allianz Life
Insurance Co. Ltd. was incorporated on 12th March 2001. The company received the Insurance
Regulatory and Development Authority (IRDA) certificate of Registration (R3) No 116 on 3rd August
2001 to conduct Life Insurance business in India.
BAJAJ ALLIANZ- THE PRESENT

I. Pan India presence in more than 550 locations.

II. Wide range of products to suit peoples needs.

M8- P- Birla Institute of Management

Comparative analysis of ULIPS in India

III. Decentralized organizational structure for increased response and service levels.
IV. All CCCs networked with state of art IT systems.
V. Highest standard of customer service & simplified claims process in the industry.
ICICI PRUDENTIAL:
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier financial
powerhouse and prudential plc, a leading international financial services group headquartered in the
United Kingdom. ICICI Prudential was amongst the first private sector insurance companies to begin
operations in December 2000 after receiving approval from Insurance Regulatory Development
Authority (IRDA). For the year ended March 31, 2006, the company garnered Rs 24.12 billion of
weighted new business premium and wrote 837,963 policies. The sum assured in force stands at Rs
458.88 billion. The company has a network of over 72,000 advisors; as well as 9 bancassurance
partners and over 200 corporate agent and broker tie-ups. It is also the only life insurer in India to be
assigned AAA credit rating from Fitch Ratings. For the past five years, ICICI Prudential has retained
its position as the No. 1 private life insurer in the country, with a wide range of flexible products that
meet the needs of the Indian customer at every step in life.
Prudential plc is an international retail financial services group that aims to help people secure and
enhance their own and their dependants' financial well-being by providing savings, protection and
other products and services suited to their needs.
We have strong franchises in three of the largest and most attractive markets in the world, where
rising wealth and changing demographics are fuelling demand for life insurance and other long-term
savings and protection products.
Our strategy is to build successful and increasingly profitable businesses in each of these markets, and
thereby maximize returns to our shareholders over time.
ICICI Bank
ICICI Bank is India's second largest bank and largest private sector bank with over 50 years of
financial experience and with assets of Rs. 1812.27 billion as on 30th June, 2005. ICICI Bank offers a
wide range of banking products and financial services to corporate and retail customers through a
variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of
investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank is
a leading player in the retail banking market and has over 13 million retail customer accounts. The
Bank has a network of over 570 branches and extension counters, and 2,000 ATMs.

M8- P- Birla Institute of Management

Comparative analysis of ULIPS in India

Prudential plc
Established in London in 1848, Prudential plc, through its businesses in the UK and Europe, the US
and Asia, provides retail financial services products and services to more than 16 million customers,
policyholder and unit holders worldwide. As of June 30, 2004, the company had over US$300 billion
in funds under management. Prudential has brought to market an integrated range of financial services
products that now includes life assurance, pensions, mutual funds, banking, investment management
and general insurance. In Asia, Prudential is the leading European life insurance company with a vast
network of 24 life and mutual fund operations in twelve countries - China, Hong Kong, India,
Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand and Vietnam.

M8- P- Birla Institute of Management

Comparative analysis of ULIPS in India

TATA AIG
THE TATA GROUP
The Tata Group (www.tata.com) is one of India's best-known industrial groups with an estimated
turnover of around US $14.25 billion (approximately 2.6% of India's GDP). With more than 220,000
employees across 91 major companies, it is also India's largest employer in the private sector. The
Tata Group pioneered several firsts in Indian industry firsts, including: India's first private sector steel
mill, first private sector power utility, first luxury hotel chain and first international airline, amongst
others. Recently, the Tata Group's pioneering spirit has been showcased by companies such as Tata
Consultancy Services (TCS), Asia's largest software and Services Company, and Tata Motors, the first
carmaker in a developing country to design and produce a car from the ground up.

By combining ethical values with business acumen, globalization with national interests and core
businesses with emerging ones, the Tata Group aims to be the largest and most respected global brand
from India whilst fulfilling its long-standing commitment to improving the quality of life of its
stakeholders.

AIG

American International Group, Inc. is the world's leading international insurance and financial
services organization, with operations in more than 130 countries and jurisdictions. AIG member
companies serve commercial, institutional and individual customers through the most extensive
worldwide property-casualty and life insurance networks of any insurer.

M2- P- Birla Institute of Management

Comparative analysis of ULIPS in India

In the United States, AIG companies are the largest underwriters of commercial and industrial
insurance and AIG American General is a top-ranked insurer. AIG's global businesses also include
retirement services, financial services, and asset management. AIG's financial services businesses
include aircraft leasing, financial products, trading and market making. American General Finance
leads AIG's growing global consumer finance business in the United States.
AIG also has one of the largest U.S. retirement savings businesses through AIG SunAmerica and AIG
VALIC, and is a leader in asset management for the individual and institutional markets, with
specialized investment management capabilities in equities, fixed income, alternative investments and
real estate. AIG's common stock is listed in the New York Stock Exchange and ArcaEx, as well as the
stock exchanges in London, Paris, Switzerland and Tokyo.

M3- P- Birla Institute of Management

Comparative analysis of ULIPS in India

HDFC
HDFC Standard Life Insurance Company Ltd. is one of India's leading private life insurance
companies, which offers a range of individual and group insurance solutions. It is a joint venture
between Housing Development Finance Corporation Limited (HDFC Ltd.), India's leading housing
finance institution and The Standard Life Assurance Company, a leading provider of financial services
from the United Kingdom. Both the promoters are well known for their ethical dealings and financial
strength and are thus committed to being a long-term player in the life insurance industry - all
important factors to consider when choosing your insurer.

KEY STRENGTHS
Financial Expertise
As a joint venture of leading financial services groups, HDFC Standard Life has the financial
expertise required to manage your long-term investments safely and efficiently.
Range of Solutions
A wide range of individual and group solutions, which can be easily customized to specific needs.
Group solutions have been designed to offer you complete flexibility combined with a low charging
structure.
Track Record so far
Cumulative premium income, including the first year premiums and renewal premiums is Rs. 1532.21
Crores Apr-Mar 2005 - 06.We have covered over 1.6
million individuals out of which over 5,00,000 lives have been covered through our group business
tie-ups. Also declared as the 5th consecutive bonus in as many years for our 'with profit'
policyholders.

M4- P- Birla Institute of Management

Comparative analysis of ULIPS in India

DATA ANALYSIS:

1. Returns are calculated by taking the Net Asset Value(NAV) from 11-1-05 to 1105-06
2. Returns

are

calculated

from

inception

till

11-05-06

ASSUMPTIONS:

1. An investor wants to invest an amount of rupees 5000 every month in ULIP starting from 11-0105.

2. He is willing to invest only in equity fund.

3. investor is alive till 11-05-06

Investor's amount will be invested in equity fund of that company after paying the company charges.
After payment of charges, the remaining amount (contribution) will be invested in equity fund and it
will be converted into units by dividing the contribution by the respective day's NAV. Charges differ
from company to company. After deducting all those charges annually fund management charges is
deducted by cancellation of units. After the lock in period, investor can do partial withdrawal or whole
withdrawal. The returns of the investor is calculated by finding the total number of units and multiply
it with the NAV value on the day of withdrawal to find the total value. Then the invested amount is
deducted from the total value and the result is divided by the total investment. To find the returns
percent multiply it by 100.
For analyzing the data the criteria's are,

1. Minimum premium contribution

2. Minimum term
3. Charges in first year
4. Charges in second year
5. Advisors(agents) commission
6. Returns from inception
7. Returns from 11-01-2005 to 11-01-2006.

M5- P- Birla Institute of Management

Comparative analysis of ULIPS in India

Ranking is done based on the above criteria. Returns from 11-01-2005

to 11-05-2006 are as follows:

1.
2.
3.
4.
5.

SBILIFE
ICICIPRUDENTIAL
HDFC
TATAAIG
BAJAJALLIANZ

38.85 %
24.41 %
18.83 %
(6.04 ) %
(32.43) %

Returns per year since inception:

1. ICICIPRUDENTIAL
2. SBILIFE
3. HDFC
4. TATAAIG
5. BAJAJALLIANZ
CONCLUSION

30.04 %
25.01 %
8.08 %
7.09 %
(2.71) %

As we have all know today's scenario, awareness of Life Insurance is being created among the people,
standard of life is increasing day-by-day; many people tend to cover their risk associated with their
life by taking Insurance for their life. People are expecting high returns from ULIPs. Since ULIPs are
hot selling product in Life Insurance Industry, contributing more than 70 % of the premium collected
by each company per year.

Investors need the clarity about the products of different life insurance companies particularly ULIP's.
Hence we have tried to give our best to the investors by comparing the ULIP's of 5 leading insurance
companies.

Based on the returns given by the companies, which we have compared, SBI has given the maximum
return compared to the other 4 insurance companies. And, if we calculate the returns from the
inception, the ICICI PRUDENTIAL has given good returns.

M5- P- Birla Institute of Management

Comparative analysis of ULIPS in India

As per the objective of this study we have ranked the 5 major players in ULIP's. And found that the
ICICI PRUDENTIAL leads the other 4 insurance companies.
HDFC
DATE
11/1/2005
11/2/2005
11/3/2005
11/4/2005
11/5/2005
11/6/2005
11/7/2005
11/8/2005
11/9/2005
11/10/2005
11/11/2005
11/12/2005

NAV
24.94
26.06
27.43
26.02
26.74
27.95
29
31.28
33.18
34.6
33.4
38.03

CONT MONTHLY
PREMIUM %
5000
5000
5000
5000
5000
5000
5000
5000
5000
5000
5000
5000

73%
73%
73%
73%
73%
73%
73%
73%
73%
73%
73%
73%

CONT.
CHARGES
15
15
15
15
15
15
15
15
15
15
15
15

Rs..

UNITS
3635
3635
3635
3635
3635
3635
3635
3635
3635
3635
3635
3635

-0.80%
11/1/2006
11/2/2006
11/3/2006
11/4/2006
11/5/2006

39.88
42.65
45.99
50.81
54.12

5000
5000
5000
5000
5000

M5- P- Birla Institute of Management

73%
73%
73%
73%
73%

145.75
139.49
132.52
139.70
135.94
130.05
125.34
116.21
109.55
105.06
108.83
95.58
1484.03
1472.16

15
15
15
15
15

3635
3635
3635
3635
3635

91.15
85.23
79.04
71.54
67.17
394.12

TOTAL UNITS

1866.28

TOTAL VALUE

101003.21

RETURNS

16003.21

RETURNS %

18.83

Comparative analysis of ULIPS in India

ICICI

CONTRIBUTION

CONTRIBUTION

NAV

PREMIUM

Rs.

UNITS

01
20-12-

10.17

5000

82%

4100

403.15

01
20-01-

10.42

5000

82%

4100

393.47

02
20-02-

10.71

5000

82%

4100

382.82

02
20-03-

11.13

5000

82%

4100

368.37

02
20-04-

11.12

5000

82%

4100

368.71

02
20-05-

10.79

5000

82%

4100

379.98

02
20-06-

10.27

5000

82%

4100

399.22

02
20-07-

10.73

5000

82%

4100

382.11

02
20-08-

10.69

5000

82%

4100

383.54

02
20-09-

10.27

5000

82%

4100

399.22

02
20-10-

9.91

5000

82%

4100

413.72

02

9.91

5000

82%

4100

413.72
4,688.03

DATE
20-11-

2.25%

4,582.55

20-1102
20-12-

10.36

5000

92.50%

4625

446.43

02
20-01-

11.19

5000

92.50%

4625

413.32

03
20-02-

11.47

5000

92.50%

4625

403.23

03
20-03-

11.38

5000

92.50%

4625

406.41

03
20-04-

10.77

5000

92.50%

4625

429.43

03
20-05-

10.79

5000

92.50%

4625

428.64

03
20-06-

11.3

5000

92.50%

4625

409.29

03
20-07-

12.34

5000

92.50%

4625

374.80

03
20-08-

13.11

5000

92.50%

4625

352.78

03
20-09-

14.39

5000

92.50%

4625

321.40

03
20-10-

14.87

5000

92.50%

4625

311.03

03

17.71

5000

92.50%

4625

261.15
4,557.91

2.25%

M9 P- Birla Institute of Management

4,455.36

Comparative analysis of ULIPS in India

M0- P- Birla Institute of Management

Comparative analysis of ULIPS in India

20-0206
35.84

5000

96%

4800

133.93

39.02

5000

96%

4800

123.01

43.37

5000

96%

4800

113.13

5000

96%

4800

110.68

20-0306
20-0406
20-0506
42.43
916.30

TOTAL UNITS TOTAL VALUE LESS: INV. RETURNS % RETURNS %/YEAR

15,070.57 653,610.45 378,610.45
137.67653
30.04
BAJAJ
ALLIANZ

HDFC
STANDA
RD
TATA AIG

COMPANY
ICICI PRU

SBI LIFE

CHARGESPRODUCT NAMEMIN
PREMIUMMIN TERM1ST YEAR2 ND YEARLIFE
TIMEINR 18,000.003 YRS20.0%7.5%UNIT GAININR
10,000.003 yrs70.0%2.0%ULIP
ENDOWMENTINR 10,000.0010
yrs27.0%27.0%INVEST ASSUREINR 10,000.0015
yrs40.0%20.0%UNIT PLUSINR 24,000.005
yrs25.0%7.5%

* % OF RETURNS
INCEPTION

M1. P. Birla Institute of Management

SINCE

ADVCOMM

Comparative analysis of ULIPS in India

M P- Birla Institute of Management