VIGNANA JYOTHI INSTITUTE OF MANAGEMENT

OPERATIONS AND MANAGEMENT

OF
BANKS AND INSURANCE COMPANIES

ASSIGNMENT

Submitted by:
EGA SRIDHAR REDDY
151330
Section: A
Insurance
Life Insurance is the key to good financial planning. On one hand, it safeguards your money and
on the other, ensures its growth, thus providing you with complete financial wellbeing. Life
Insurance can be termed as an agreement between the policy owner and the insurer, where the
insurer for a consideration agrees to pay a sum of money upon the occurrence of the insured
individual's or individuals' death or other event, such as terminal illness, critical illness or
maturity of the policy. Life insurance plans, unlike mutual funds, are beneficial when you look at
them as a long term avenue of investment which also offers protection through life cover. Life
insurance policies are broadly categorized into 2 types namely Traditional Plans and Unit Linked
Insurance Plans. ULIPs, on the other hand provide a combination of risk cover and investment.
More importantly they offer a flexibility to decide your risk taking profile. Insurance policies are
used to hedge against the risk of financial losses, both big and small, that may result from
damage to the insured or her property, or from liability for damage or injury caused to a third
party.

Investments
Todays Generation will live longer than previous ones implying the need to have enough funds
that can sustain longer life. To ensure that our loved ones continue to enjoy a good life and are
able to meet various financial goals which have to be set to achieve, building a savings portfolio
with an emphasis on long term savings. Regular savings over a long period which ensures that a
corpus is built to meet financial goals at various life stages.

Life insurance is at the earliest possible because there is no point in waiting for a calamity to
happen and then losing all your savings in its aftermath. If you intend on taking life insurance for
family members, then its best to do it as soon as you get married. For individual life insurance
plans its best to take them at the age of 18.

Certain investment planning of my family

Saving for the down payment on a home.

Increasing income through business and investment in business.
Setting aside money to pay for the expenses associated with a new home.
Investing in certain insurance and mutual funds.
Paying off the mortgage on home.
 Putting more money into retirement accounts.
Setting up a small business.
Investment in shriram chit funds.

Unit Linked Insurance Plans (ULIP)

ULIPs are a variant of the traditional endowment plan. They pay out the sum assured (or the
investment portfolio if its higher) on death/maturity. ULIPs differ from traditional endowment
plans in certain areas. As the name suggests, performance of ULIP is linked to markets.
Individuals can choose the allocation for investments in stock/debt markets. The value of the
investment portfolio is captured by the NAV (net asset value). To that end, there are many
similarities between ULIPs and mutual funds. ULIPs differ in one area, they are a combination of
investment and insurance, while mutual funds are a pure investment avenue.
A ULIP is an insurance cum investment plan and returns solely depends on the market
performance.
The money is invested in debt, equity and hybrid funds which can be chosen as per risk
capacity. One can switch between funds
Triple tax benefit structure is applicable.
ULIPs offer tax benefits under section 80C
The final amount at maturity is tax free under section 10(10D). Thus the income is tax
free for self as well as the nominee.
The whole investment amount does not bear any service tax other than the mortality
charge.

Unit Linked Plans (ULIP) allows you to switch your investment between the funds linked
to the plan.
The switching facility of a ULIP is a key feature that differentiates it from a mutual fund.
One can shift money from debt to equity, and vice versa, depending on your reading of
the market.
In order to get the best out of the ULIP, you need to hold it for at least 12-15 years.

For an annual premium of 1, 00,000 one can get a minimum Life Cover of 10, 00,000.
ULIP is basically a long term investment plan, as children grow older, the financial liabilities
 increase. As a result, one can increase the level of protection of your family by increasing
Life Cover.
SBI LIFE INSURANCE E-Shield
Assumed amount 50,00,000 with pay term of 10 years at a premium of 2,185 with 40,940 of critical
illness benefit

Benefits

Death Benefit: If the death of life insured occurs during the policy term then a Onetime pay-out
equal to the Total Pay-out (Sum Assured) is paid to the nominee of the life insured.
Longer Protection: Coverage up to 70 yrs. of age can be chosen under the plan with a maximum
policy term of 35 yrs., Hence the aim is to provide longer protection under the plan.
Affordable & Easy on the pocket: The premium amount payable for the term insurance plan is
low & affordable, hence ensuring protection benefit is available at a low cost.
Tax Benefits: The premiums paid & Death Benefit received for the plan enjoy tax benefit as per
IT Act 1961. The deduction of tax is under Sec 80(C) & 10(10D) of the IT Act

TOP UP Health Insurance Plan

A top-up health policy is an additional coverage for people who have an existing individual plan
or a medic aim from the employer. Top-up health plans have a similar role it is like the stepony
supporting you after the sum insured limit of your health insurance is exhausted.
In case your health insurance provides a cover of Rs.5 lakh rupees and your top-up plan provides
you cover of Rs. 7 lakhs. The top-up amount comes in use only after the threshold limit is
crossed. So, if you have a claim of Rs. 8 lakhs then first of all base policy of Rs. 5 lakhs will be
used and the left over Rs.3 lakhs are given from the top-up plan
Top-up plans are cheaper than the basic health insurance. These can also be taken long with the
health cover provided by the employer.
Building gap between the policies, cover and costing, these top up plans of higher deductibles
are generally cheaper than your basic health insurance.