1

RECRUITMENT OF FINANCIAL CONSULTANT

Sar Utha Ke Jiyo

Project Report Submitted

By

(NARENDER KUMAR KUMAWAT)

Submitted to

(Director: JECRC School of Management)

In Partial Fulfillment for the Award Of

P.G. degree of

MASTER OF BUSINESS ADMINISTRATION

2007-09

JECRC School of Management

(Affiliated to Rajasthan Technical University & Approved By AICTE)

JECRC Campus, Opp. EPIP Gate, Tonk Road, Jaipur

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AKNOWLEDGEMENT

Firstly I thank the great God by the grace of whom this dissertation

was under taken and duly completed in time.

I take the opportunity to express my profound sense of gratitude and

sincere indent ness to Mr. SUMER SINGH (C.D.M.) under sympathetic

pains taking and kind guidance of whom I was able to complete this

dissertation.

Thanks to all

NARENDER KUMAR KUMAWAT

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PREFACE

The project work done on “Life Insurance Industry in India”, at HDFC STANDARD LIFE

REGINAL HEAD OFFICE GOPALPURA, JAIPUR, focuses primarily on assessing the

future of the Insurance sector in India as seen through the eyes of HDFC. Evaluating the

performance of this sector has been very difficult because of the immense competition in this

sector.

Future of a particular service depends on the performance of that service sector and evaluation

of performance of Insurance sector is very difficult task because performance is a

multidimensional contract. It is important to recognize what good performance means. From

strictly financial perspective, the management can achieve high yield performance primarily

through providing quality service to customers.

This project report is divided into two parts: In the first part, a detailed introduction about the

company profile and Product and services are given.

In the second part, research methodology, observation, and suggestion that had been given to

the company based on the research study has been given.

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CONTENTS

 Acknowledgement
 Preface

PART : 1

Introduction

 Indian Insurance Industry

 IRDA Act, 1999

History of HDFC Standard Life Insurance

 The partners

Company Profile

 The partnership
 Incorporation of HDFC SLIC
 Our mission
 Our values
 Our vision
 Accolades and Recognition

PART : 2

Product Information

 Objective of Study
 Importance of Study
 Scope of Study
 Research Methodology
 SWOT Analysis
 Research Findings & Analysis
 Private Market Share – Retail : March – June, 2007
 Questionnaire
 Conclusion
 Recommendation
 Bibliography
 Glossary
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INDIAN INSURANCE INDUSTRY

The Indian Insurance sector has been going through a transition. With the private sector

companies making a foray into the market, the scenario has started to change. Liberalization of

the sector has helped in bringing about several positive developments, including the expansion

of the market size, introduction of new product, and development of new channel distribution

in the market. However, the most important development is that the insurance companies have

become more responsible towards customer needs.

The first visible change can be found in the introduction of new products. The most popular

among the products are the Unit Linked Policies. Riders have already been introduced and

have become very popular. Some of the new policies introduced are:

 Policies with reduced of premium for non-smokers

 Policies launched for the future benefit of children along with the coverage of the life

of their parents.

 Policies for village artisans

 Travel insurance scheme for students going abroad for higher studies

 Weather insurance policies

Sustainable growth would be possible in an environment which values and promote financial

strength and stability, management capability, and public accountability. IRDA has, so far,

issued 21 regulations, covering all aspects of insurance business. Many more are likely to

come up emphasizing openness and transparency. The industry will see developments in terms

of product innovation, appropriate pricing, speedy settlement of claims, innovative covers for

unusual risk and the use of alternative distribution channels. The regulator will play a major

role in bringing discipline in the market in public discloser and consumer education.
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INSURANCE REGULATORY

&
DEVELOPMENT AUTHORITY
ACT, 1999 (IRDA)
Role of IRDA:

IRDA is a revolutionary piece of legislation. The IRDA was established to regulate, promote,

and ensure orderly growth of the life and general insurance industry.

The authority consists of the following members:

 A chairperson

 Not more than 5 whole time members

 Not more than 4 part time members

Inaction of IRDA:
 To exercise all power and function of

controller of insurance

 Protection of the interests of the policy holders

 To issue, renew, modify, withdraw, or suspend certificate of registration

 To specify requisite qualifications and training for insurance intermediaries

 To promote and regulate professional organization connected with insurance

 To conduct inspection/investigation, etc.

 To prescribe method of Insurance Accounting

 To regulate investment of funds and margins of solvency

 To adjudicate upon disputesTo conduct inspection and audit of insurers, intermediaries,

and other organizations connected with insurance.

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THE PARTNERS
Housing Development Finance Corporation Limited (HDFC)

Founded in 1977, HDFC today is the market leader in human finance in India and has extended

financial assistance for more than 19 lakh homes. HDFC has over 120 offices in India,

presently. It has one international office in Dubai and Service Associates in Bahrain, Kuwait,

Qatar, Saudi Arabia, and Sultanate of Oman. HDFC’s asset base amounts to over Rs. 21,450

crore. Its financial strength is reflected in highest safety ratings of ‘FAAA’ and ‘MAAA’,

awarded by CRISIL and ICRA – two of India’s leading credit rating agencies, respectively, for

the last 7 years, respectively. It has a depositor base of over 13 lakh depositors and deposit

agents force of over 50,000. Of the total deposits, 82% are sourced from individual and trust

depositors, which demonstrate the tremendous confidence that retail investors have in the

company.

HDFC-promoted companies have emerged to meet the investors’ and customers’ need:

 HDFC Bank for commercial banking

 HDFC Mutual Funds for mutual fund products

 HDFC Life Insurance Company for life insurance and pension products, and

 HDFC Chubb for general insurance products

Being an institution that is strongly committed to the highest standards of quality and

excellence, HDFC has won several accolades in the past few years. One such award is the

“Ramakrishna Bajaj National Quality Award” for the year 1999. This award was instituted to

award recognition to Indian companies for business excellence and quality achievement.

HDFC is the only company, so far, to receive this award in the service category.
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Standard Life Assurance Company (SLAC)

Founded in 1825, Standard Life has been at the forefront of the UK insurance industry for 177
years by combining sound financial judgement with integrity and reliability. The largest
mutual life company in Europe, it has operations in United Kingdom, Ireland, Spain, Germany,
Austria, and Canada with representative offices in Hong Kong and China.

One of its most recent successes was launch of Standard Life Bank on 1st January, 1998. The
introduction of its innovation mortgage product in January 1999 had an immediate impact on
the UK market, according for 11% of all new lending within the first operational year. The
current deposit base of the bank is US $7.1 billion. Standard Life has total assets of over US
$100 billion and new premium last year of US $9.2 billion. Its US investment portfolio
accounts for approximately 2% of all shares listed in London Stock Exchange. It is one of the
few insurance companies in the world to receive AA rating from two the leading international
credit rating
agencies – Moody’s and S & P.

Not surprisingly, Standard Life is rated as one of the strongest companies in the world. In

financial terms, the quality and values Standard Life

brings to this venture are immense. The company’s reputation in the UK market remains

unrivalled. Besides being voted ‘Company of the Year’ for overall service, for the third

consecutive year, Standard Life has been recently voted ‘Company of the Decade’ by

independent brokers.
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HDFC STANDARD LIFE

About us
Board members
Our parentage
Our group companies
The partnership
Incorporation of HDFC Standard Life Insurance Company
Our mission
Our values
Our vision
Accolades and Recognition

About us

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.
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Our 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

We have a range of individual and group solutions, which can be easily customized to specific

needs. Our group solutions have been designed to offer you complete flexibility combined with

a low charging structure.

Track Record so far

Our 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.

Board members

Brief profile of the Board of Directors:

 Mr. Deepak S Parekh is the Chairman of the Company. He is also the Executive

Chairman of Housing Development Finance Corporation Limited (HDFC Limited). He joined

HDFC Limited in a senior management position in 1978. He was inducted as a whole-time

director of HDFC Limited in 1985 and was appointed as its Executive

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Chairman in 1993. He is the Chief Executive Officer of HDFC Limited. Mr. Parekh is a

Fellow of the Institute of Chartered Accountants (England & Wales).

 Mr. Keki M Mistry joined the Board of Directors of the Company in December, 2000.

He is currently the Managing Director of HDFC Limited. He joined HDFC Limited in 1981

and became an Executive Director in 1993. He was appointed as its Managing Director in

November, 2000. Mr. Mistry is a Fellow of the Institute of Chartered Accountants of India and

a member of the Michigan Association of Certified Public Accountants.

 Mr. Alexander M Crombie joined the Board of Directors of the Company in April,

2002. He has been with the Standard Life Group for 34 years holding various senior

management positions. He was appointed as the Group Chief Executive of the Standard Life

Group in March 2004 and is also the Chief Executive of Standard Life Investments Limited.

Mr. Crombie is a fellow of the Faculty of Actuaries in Scotland.

 Ms. Marcia D Campbell is currently the Group Operations Director in The Standard

Life Assurance Company and is responsible for Group Operations, Asia Pacific Development,

Strategy & Planning, Corporate Responsibility and Shared Services Centre. Ms. Campbell

joined the Board of Directors in November 2005.

 Mr. Keith N Skeoch is currently the Chief Executive in Standard Life Investments

Limited and is responsible for overseeing Investment Process & Chief Executive Officer

Function. Prior to this, Mr. Skeoch was working with M/s. James Capel & Co. holding the

positions of UK Economist, Chief Economist, Executive Director, Director of Controls and

Strategy HSBS Securities and Managing Director International Equities. He was also

responsible for Economic and Investment Strategy research

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produced on a worldwide basis. Mr. Skeoch joined the Board of Directors in November

2005.

 Mr. G N Bajpai was the former chairman of Life Insurance Corporation of India and

Securities and Exchange Board of India. Mr. Bajpai retired from Life Insurance Corporation of

India with more than 3 decades of experience and further served SEBI as its chairman for 3

 years, during which time he had strengthened the compliance enforcement in SEBI.

 Mr. Gautam R Divan is a practicing Chartered Accountant and is a Fellow of the

Institute of Chartered Accountants of India. Mr. Divan was the Former Chairman and

Managing Committee Member of Midsnell Group International, an International Association

of Independent Accounting Firms and has authored several papers of professional interest. Mr.

Divan has wide experience in

auditing accounts of large public limited companies and nationalised banks, financial

and taxation planning of

 individuals and limited companies and also has substantial experience in structuring

overseas investments to and from India.

 Mr. Ranjan Pant is a global Management Consultant advising CEO/Boards on Strategy

and Change Management. Mr. Pant, until 2002 was a Partner & Vice-President at Bain &

Company, Inc., Boston, where he led the worldwide Utility Practice. He was also Director,

Corporate Business Development at General Electric headquarters in Fairfield, USA. Mr. Pant

has an MBA from The Wharton School and BE (Honours) from Birla Institute of Technology

and Sciences.
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 Mr. Ravi Narain is the Managing Director & CEO of National Stock Exchange of India

Limited. Mr. Ravi Narain was a member of the core team to set-up the Securities & Exchange

Board of India (SEBI) and is

 also associated with various committees of SEBI and the Reserve Bank of India (RBI).

 Mr. Deepak M Satwalekar is the Managing Director and CEO of the Company since

November, 2000. Prior to this, he was the Managing Director of HDFC Limited since 1993.

Mr. Satwalekar obtained a Bachelors Degree in Technology from the Indian Institute of

Technology, Bombay and a Masters Degree in Business Administration from The American

University, Washington DC.

Our parentage

HDFC Limited

 HDFC is India’s leading housing finance institution and has helped build more than

23,00,000 houses since its incorporation in 1977.

 In Financial Year 2003-04 its assets under management crossed Rs. 36,000 Cr.

 As at March 31, 2004, outstanding deposits stood at Rs.7,840 crores. The depositor

base now stands at around 1 million depositors.

 Rated ‘AAA’ by CRISIL and ICRA for the 10th consecutive year

 Stable and experienced management

 High service standards

 Awarded The Economic Times Corporate Citizen of the year Award for its long-

standing commitment to community development.

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Standard Life Assurance Company

 Standard Life has been looking after the financial needs of customers for more than

180 years.It currently has a customer base of over 7 million people who rely on the

company for their insurance, pension, investment, banking and health-care needs.

 It currently manages over £ 90 billion in assets.

 Leader in the employee benefit market in both the UK and Canada.

 Rated by Standard & Poor's as 'strong' with a rating of A+ and as 'good' with a rating of

A1 by Moody’s.

 Winner of numerous prestigious industry awards in the UK,including:

- “Company of the Year” for the seventh successive year (Money Marketing Awards)

- “Best Pension Provider” (2004 and 2005 Money Marketing Awards)

 - “Best Pension Product” (2003 -2005 Money facts Investment, Life & Pension

Awards)

Our group companies

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The partnership
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HDFC and Standard Life first came together for a possible joint venture when they entered the

Life Insurance market in January in 1995. It was clear that both the companies shared similar

values and belief and a strong relation formed quickly. In October 1995, both the companies

signed a 3 year joint venture agreement.

Around this time, Standard Life purchased a 5% stake in HDFC, further strengthening the

relationship.

The next three years were filled with uncertainty, due to changes in Government and

ongoing delays in getting the IRDA (Insurance Regulatory and Development Authority) Act

passed in the parliament. Despite these, both the companies remained firmly committed to the

venture.

In October 1998, the joint venture agreement was renewed and additional resource made

available. Around this time Standard Life purchased 2% stake in Infrastructure Development

Finance Co. Ltd. (IDFC). Standard Life started to use the services of the HDFC Treasury

Department to advice upon their investments in India. Towards the end of 1999, the opening of

the market looked very promising. Both the companies agreed that the time was right to move

the operation to the level of action. Therefore, in January 2000, an expert team from the UK

joined a selected team from HDFC to form the core project team, based in Mumbai.

Incorporation of HDFC Standard Life Insurance Company

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The company was incorporated on 14th August, 2000 under the name of Standard Life

Insurance Company Limited.

HDFC’s ambition from as far back as October 1995, was to be the first private company to re-

enter the Life Insurance market in India. On 23rd September, 2000, this ambition was realized

when HDFC Standard Life was the only company to be granted a certificate of registration.

HDFC group is the main shareholder in HDFC Standard Life, with 81.4% ownership while

Standard Life 18.6%. Given Standard Life’s existing investment in HDFC group, this is the

maximum investment allowed under current regulations.

HDFC and Standard Life have a long and close relationship built upon single value and trust.

The ambition of HDFC Standard Life is to mirror and showcase the parent companies and to

be the yardstick by which all other insurance companies in India can be measured.

Our mission

“We aim to be the top new life insurance company in the market”

This does not just mean being the largest or the most productive/competitive in the market,

rather it is a combination of several things like:

 Customer service of the highest order

 Value for money for customer

 Professionalism in carrying out business

 Innovative products to cater to different needs of different customer

 Use of technology to improve service standards

 Increase in market share

Our Values
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 SECURITY: Providing long-term financial security to our policy holders is our

constant endeavour. We shall do this by offering life insurance and pension products.
 TRUST: We appreciate the trust placed by our policy holders in using our
products. We will aim to manage their investments very carefully and live under trust.
 INNOVATION: Recognizing the different needs of our customers by offering

them a wide range of innovative products to meet their needs.

.Our Vision

“The most successful and admired life insurance company, which means that we are the most

trusted company, the easiest to deal with, offer the best value for money, and set the standards

in the industry”.

'The most obvious choice for all'.

Our Values

Values that we observe while we work:

 Integrity

 Innovation

 Customer centric

 People Care “One for all and all for one”

 Team work

 Joy and Simplicity

Accolades and Recognition

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 Rated by 'Businessworld' as 'India's Most Respected Private Life Insurance Company'

in 2003

 Rated as the "Best New Insurer - 2003" by Outlook Money magazine, India’s number 1

personal finance magazine

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Terms of life are hard, but the terms of insurance are easy!!
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Insurance: The concept

Insurance is the compensation of financial losses on happening of an uncertain event. When

insurance is purchased, the risk of financial loss due to happening of that uncertain event is

transferred from the policy holder to the insurance company. When the claim arises, company

pays a lump sum amount to the policy holder or to her nominee that will be utilized to generate

income for them. It is important to note that we do not protect the life of the policy holder but

her income earning capacity. We offer plans that cover the risk of income earning capacity on

happening of specified uncertain events.

Uncertain events

Uncertainty is part of our everyday life. However, all the uncertain events cannot be insured.

As is obvious from the preceding discussion, we focus

only on those uncertain events when income earning capacity is stopped, which happens due to

the following four major events:

 Death

 Sickness

 Accident

 Retirement

Firstly, three events are uncertain. Nobody can predict when they happen. So we have

insurance cover for them. Retirement, however, is a certain event. We know our age of

retirement and it is a certain event so there is no insurance cover for retirement. Another

important point to be considered is the nature of accident or sickness. There could be minor

illness or accidents resulting in temporary disability. All of them need not result into loss of
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income earning capacity. We cover only those accidents and sicknesses where the income

earning capacity is lost either permanently or for a specified minimum period. Assurances in

the form of various riders offered by different companies are also a part of protection category.

The claim is paid only if the stipulated event happens otherwise on maturity at the end of the

term.

Insurance products

Today there are many insurance products available in the market. Each company has its set of

products that it offers to the customers. This makes it difficult to keep track of all the products

at the same time. A better way to understand them is by way of classification. All insurance

products can be classified according to four basic categories:

PROTECTION INVESTMENT

PENSION SAVINGS

This classification is based on the needs of the customers. Accordingly, each of these

categories are classified by needs and all the products coming under that category aim to fulfill

that need, e.g. products coming under investment category aim to promote long-term real

growth over the period. Thus, understanding these categories will not only help us to

understand various products but also help us to position our products strongly in a competitive

market.
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Investment type of products

In investment type of products, the focus is on maximizing returns for the customer over a

period of time. In a way, it is opposite to protection type where the focus on maximizing the

risk cover is very low. The objective is to put maximum amount in investment. The underlying

principle is to commit money for a certain period of time and get the benefits of real long-term

growth. The products are usually single-premium policies where the entire premium is

collected in advance. Surrenders are discouraged and there is a commitment for a certain

minimum of years. In the event of death, the term value of the investment is returned.

Pension products

It is another very popular type of product. Along with the risk of an untimely death or

disability, we also have the risk of living too long to outlive our source of income. In other

words, one needs to ensure that she gets a decent income as long as she lives. This is where we

have pension products addressing the need for a comfortable retirement. One can opt for an

immediate pension or for a pension at a future date (also called as deferred pension) – one can

have a range of options when selecting a pension plan. There is a great amount of flexibility

when it comes to selecting a pension product. The important point to note is that pension is a

part of one’s present income that forms the basis for future consumption. Every year income is

accumulated and invested in a pension fund. The lump sum accumulated then is used for

purchasing on the vesting date.

Saving type of products

People like to save. Our saving rate is well above 20% of our GDP for last few years. They

save for events like child’s marriage, education, etc. Savings products aim to strike a good
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balance between risk cover as well as returns. It acts as a protection on savings. Sum assured

is usually targeted savings that one looks for. She gets that amount at the end of the term along

with the bonuses if it is a participating policy. On the protection side, if any unfortunate event

happens during the term, the sum assured (targeted savings) is still paid so it encourages a

person to save for an event and at the same time it ensures that her savings are protected. This

is the unique advantage of savings through life insurance that no other financial product offers.

Protection type of products

A typical protection type of product aims at protecting income earning capacity of the

customers on happening of uncertain events during the term of the product. These are the pure

risk product having no saving element. Naturally, these products do not have any maturity

benefits. High risk cover at low cost is the unique of this type of product that makes this

category most attractive for those who want high insurance cover without spending much for

it. Usually offered for a definite term, all these products come under 4 broad categories. To

understand a product, it is essential to find out the category based on its features. Needless to

say, it will not be possible to compare one product category to another. Each category is unique

and caters to particular needs of the customers.

The best approach is to find out what customers need and then suggest a solution

accordingly.

Our role

Insurance, as we have seen, is a basic need that every person has. Our role as insurance service

provider, is to make her aware of these underlying needs and help her to arrive at appropriate

solutions that would to her insurance needs. In this process, we will help her to build up a

financial plan for a sound future. It calls for high degree of professionalism, integrity, and

strong faith in the company along with high customer orientation.

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UNIT LINKED PRODUCTS

UNIT LINKED YOUNG STAR PLAN

The HDFC Unit Linked Young Star gives you:

 An outstanding investment opportunity by providing a choice of thoroughly researched

and selected investments

 Valuable protection to your child in case you are not around

 Flexible benefit combinations and payment options

 Flexible additional benefit options such as critical illness cover

 Access to your accumulated fund before maturity

4 EASY STEPS TO YOUR OWN PLAN

Step 1 Choose the premium you wish to invest.
Step 2 Choose the amount of protection (Sum Assured) you desire.
Step 3 Choose the additional plan benefits you desire.
Step 4 Choose the investment fund or funds you desire.
Step 1: Choose your regular premium
Minimum regular premium is Rs 10,000/- per year, can be paid:

 Monthly (using Standing Instructions or ECS mandate)

 Quarterly

 Half-yearly

 Annually

You may also choose to pay adhoc Single Premium Top-Up or additional regular premiums

depending on your convenience.

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Step 2: Choose your level of protection

You can choose any amount of Sum Assured with:

 A minimum of 5 times your chosen annual regular premium

 A maximum of 40 times your chosen annual regular premium

Step 3 : Choose additional plan benefits

We offer a range of valuable protection options of secure your family. You can choose any one

of the following benefits:

Life Option → Death Benefit

Life & Health Option → Death Benefit + Critical Illness Benefit

BENEFIT SUMMARY
TYPES
• We will pay the Sum Assured to your beneficiary
• Your family need not pay nay further premiums. We will pay
future regular premiums on your behalf, at the original level
Death chosen by you
Benefit • Any Critical Illness Cover terminates immediately
• We will pay the Sum Assured to your beneficiary
• Your family need not pay any further premiums. We will pay
Critical future regular premiums on your behalf, at the original level
Illness chosen by you.
Benefit • The Death Benefit Cover terminates immediately
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Step 4 : Choose your investment funds

In this plan the investment risk in your chosen investment portfolio is borne by you, which

means that the premiums you pay in this plan are subject to investment risks associated with

the capital markets.

We have 6 funds that balance your level of risk and return. You can choose from all or any of

the following 6 funds:

 Asset Class
Bank Govt. Equity
30
Fund Details Deposits Securities Risk &
& & Bonds Return
Money Rating
Market

Fund Composition
Liquid Fund • Extremely low
capital risk
• Very stable returns 100% - - Low
Secure • More capital
Managed stability than equity
Fund funds
• Higher potential - 100% - Low
return than Liquid Moderate
Fund
• Access to better
Defensive long-term returns
Managed through equities
Fund • Significant bong
exposure keeps risks
down - 70% to 15% to Moderate
85% 30%
Balanced • Increased equity
Managed exposure gives better
Fund long-term return
• Bond exposure
provides some
stability - 40% to 30% to High
70% 60%
Equity • Further increased
Managed exposure to equities to
Fund give a better long-
term return
• A smaller bond
holding will aid
diversification and
provide a little - 0% to 60% to Very high
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Flexible Options for your Children’s needs

Flexible Options Benefits

Premium You can pay your regular premium up to 15 days after the due
Payments date to fit in with your cash flows
Single Premium Once we have issued your policy, you can invest more than
Top-Up your regular premium, subject to the following conditions:
• You have paid all your regular premiums to date
• Your total Single Premium Top-Ups at any time is not
more than 25% of your total regular premium paid to date
• Each Single Premium Top-Up amount is at least Rs. 5,000

Premium You can increase, reduce, or stop your regular premium at

Changes any time as long as your policy maintains the minimum level
of life cover. The minimum increase in regular premium
amount is only
Rs. 5,000/- per year and any changes to premiums will take
place from the next premium due date.
Changing your You can change your investment fund choices in two ways:
Investment Switching: You can move your accumulated funds from one
Decisions fund to another anytime.
Premium Redirection: You can pay your future premiums
into a different selection of funds, as per your need.
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ELIGIBILITY

The age and term limits for taking out a HDFC Unit Linked Young Star, are as
shown below:

Benefit Options Term Period (Yrs.) Age at Entry (Yrs.) Max Age at
Maturity
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Min Max Min Max (Yrs.)

Life Option 10 25 18 65 75
Life & Health Option 10 25 18 55 65

CHARGES
 Premium Allocation Rate

 Fund Management Charge (FMC)

 Surrender Charge

 Other charges

TAX BENEFITS (BASED ON CURRENT TAX LAWS)

 Under Section 80C, you can save up to Rs. 33,660 from your tax each year (calculated

on the highest tax bracket) as premiums up to Rs. 1,00,000 are allowed as a deduction from

your taxable income.

 Under Section 10 (10D), the benefits you receive from this policy are completely tax-

free, subject to the exclusions.

UNIT LINKED PENSION PLAN

The HDFC Unit Linked Pension gives you:

 An outstanding investment opportunity by providing a choice of thoroughly researched

and selected investments

 Provides a post retirement income for life

 Gives you the flexibility to plan your retirement date

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 Gives you the freedom to invest premiums as per your preference

3 EASY STEPS TO YOUR OWN PLAN

Step 1 Choose your retirement age

Step 2 Choose the premium you wish to invest, based on your retirement
needs
Step 3 Choose the investment fund(s) you desire

Step 1 : Choose your retirement age

You can select any age you wish to retire at (Vesting age), between 50 years and 75 years.

Step 2 : Choose your premium

You can choose either a Single Premium Policy or a Regular Premium Policy

Minimum regular premium is Rs 10,000/- per year, can be paid:

 Monthly (using Standing Instructions or ECS mandate)

 Quarterly

 Half-yearly

 Annually

The minimum premium for a Single Premium Policy is Rs. 25,000.

Step 3 : Choose your investment funds

In this plan the investment risk in your chosen investment portfolio is borne by you, which

means that the premiums you pay in this plan are subject to investment risks associated with

the capital markets.

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Flexible Options for you and your family’s needs

Flexible Benefits
Options
Premium You can pay your regular premium up to 15 days after the due
Payments date to fit in with your cash flows
Single Premium Once we have issued your policy, you can invest more than your
Top-Up regular premium, subject to the following conditions:
• You have paid all your regular premiums to date
• Each Single Premium Top-Up amount is at least Rs. 5,000

Premium You can increase, reduce, or stop your regular premium at any
Changes time. The minimum increase in regular premium amount is only
Rs. 5,000/- per year and any changes to premiums will take
place from the next premium due date.

Changing your You can change your investment fund choices in two ways:
Investment Switching: You can move your accumulated funds from one
Decisions fund to another anytime.
Premium Redirection: You can pay your future premiums into
a different selection of funds, as per your need.

ELIGIBILITY

The age and term limits for taking out a HDFC Unit Linked Pension, are as shown

below:
 36

Benefit Options Term Period (Yrs.) Age at Entry (Yrs.) Age at

Vesting(Yrs.)
Min Max Min Max Max Min
Regular Premium 10 40 18 65 50 75

Single Premium 5 40 18 70 50 75

CHARGES

 Premium Allocation Rate

 Fund Management Charge (FMC)

 Surrender Charge

 Other charges

TAX BENEFITS (BASED ON CURRENT TAX LAWS)

 Under Section 80CCC, you can save up to Rs. 33,660 from your tax each year

(calculated on the highest tax bracket) as premiums up to Rs. 1, 0,000 are allowed as a

deduction from your taxable income.

CHILDREN’S PLAN

HDFC CHILDREN’S PLAN

The HDFC Children’s Plan gives you:

 Invaluable financial support to your child

 37

 Helps you customize an ideal plan for your child

 Provides you multiple options for multiple benefits

3 Easy Steps To Your Own Plan

Step 1 Choose the amount of targeted savings and policy term using our
Financial Planning Tool
Step 2 Choose any one of the 3 plan options as per your child’s requirement
Step 3 Work out the premium payable and Sum Assured with our Financial
Consultant

Step 1 : Choose the amount of targeted savings

This plan gives you the flexibility to structure the ideal plan for your child.

 Estimate the money, which you might require for your child at any one of the

milestones in his or her future

 Choose the amount of targeted savings and policy term using the Financial Planning

Tool available with our Financial Consultant

Step 2 : Choice of 3 Plan options

You can choose any one of the 3 plan options at the start of the policy:

 Accelerated Benefit Plan → Death Benefit OR Maturity Benefit

 Maturity Benefit Plan → Death Benefit AND Maturity Benefit

 Double Benefit Plan → Death Benefit AND Maturity Benefit

Plan Option Death Benefit Maturity Benefit

(On death of insured parent
during the policy term)
 38

Accelerated • We will pay the Sum Assured + • We will pay the Sum
Benefit Plan Bonuses Declared Assured+Bonuses Declared
• The policy terminates
immediately
Maturity • Your family need not pay any • We will pay the Sum
Benefit Plan further premiums and policy Assured+Bonuses Declared
continues

Double Benefit • We will pay the Sum Assured • We will pay the Sum
Plan • Your family need not pay any Assured+Bonuses Declared
further premiums and the policy
continues

Step 3 : Premium you need to pay

The table below shown the Indicative Premiums for a male life assured paying annual

premiums for a Rs 5 lakh sum Assured policy with the policy maturing when the child is 21

years old (i.e. 20 year term period and current age of child is assumed to be 1 year).

Age of Accelerated Benefit Plan Maturity Benefit Double Benefit Plan

Parent (Rs.) Plan (Rs.)
(Yrs.) (Rs.)
30 23,575 22,690 24,085

35 24,045 22,820 24,790

40 24,890 23,055 26,005

ELIGIBILITY
The age and term limits for the insured parent for taking out the HDFC Children’s Plan are as
shown below:
 39

Term Period (Yrs.) Age At Entry (Yrs.) Max Age

At
Maturity (Yrs.)
Min Max Min Max
10 25 18 60 75

TAX BENEFITS (BASED ON CURRENT TAX LAWS)

 Under Section 80C, you can save up to Rs. 33,660 from your tax each year (calculated

on the highest tax bracket) as premiums up to Rs. 1,00,000 are allowed as a deduction from

your taxable income.

 Under Section 10 (10D), the benefits you receive from this policy are completely tax-

free, subject to the exclusions.

Customer Service
Premium Payment
 This section gives you all the details that you may require to pay your premium and

make it a hassle free experience. Along with various premium payment options currently

available to you, we have also drawn up a checklist of details that you will need in case you are

paying through cheque or demand draft.

 6 Easy Ways to pay your premium:

 40

At any HDFC SLIC branches

You can deposit Cheque / Demand Draft drawn in favour of “HDFC SLIC” at any of the

braches during the following business hours:

Monday to Friday : 9.30 AM to 4.30 PM (For Cash)

Monday to Friday : 9.30 AM to 5.00 PM (For Cheque)

Saturday : 9.30 AM to 12.00 Noon (For Cash & Cheques)

Closed on Sundays

Postage / Courier

You can send cheques and demand drafts drawn in favour of HDFC SLIC to any of our

branch offices

Online Payment

You can make online payment of premium anytime and from any location, at a click of the

mouse by using the Online payment facility. It is currently offered to all the policyholders who

are registered users of billjunction.com or have net banking facility with any of the following

banks - HDFC Bank, ICICI Bank, UTI Bank, State Bank of India, Punjab National Bank,

Union Bank of India.

 41

Drop boxes

You can drop cheques and demand drafts drawn in favour of HDFC SLIC into any of our drop

boxes installed at various locations in various cities.

Electronic Clearing Service (ECS) or Auto Debit facility of RBI

You can also pay renewal premiums through Electronic Clearing Service (ECS) of Reserve

Bank of India (RBI) presently available in following 42 cities:

New Delhi, Chandigarh, Kanpur, Lucknow, Jaipur, Mumbai, Panjim, Pune, Nagpur,

Ahmedabad, Baroda, Surat, Indore, Bhopal, Hyderabad, Vijaywada, Vizag, Bangalore,

Chennai, Coimbatore, Trivandrum, Kolkatta, Bhubaneswar, Guwahati, Ludhiana, Patna,

Manglore, Amritsar, Jalandhar, Allahabad, Varanasi, Agra, Rajkot, Kochi, Trichur, Jabalpur,

Gwalior, Calicut, Jodhpur, Mysore, Raipur, Udaipur

Standing Instructions (SI) Mandate

You can also pay your renewal premium through a Standing Instructions Mandate if you have

an account with HDFC Bank anywhere in India

 42

Checklist while paying your renewal premium through

cheque/ demand draft

 Please mention your policy number and name correctly on the reverse side of the

cheque/ demand draft

 We do not accept Post Dated Cheques (PDC’s) beyond the next banking day from date

of receipt

 In case of any overwriting on your cheque, please countersign the same

 As per RBI guidelines, Non MICR Cheques may not be acceptable at few locations. In

this scenario, please contact your nearest branch for more details

 For Unit Linked Polices you can pay using Local Cheques/ Demand Drafts

 For other policies you can pay using either Local or Outstation cheques or Demand

Drafts
 43

Sales Projection Table

 44

Actual
Maturity
Age 26 Value

Term 29

Year Fund 1 Fund 2

10,2 13,7
Sum Assured 1,000.00 1 30 98
22,4 29,9
Annual Premium 12,000.00 2 07 86
40,6 48,9
Freq 12 3 18 80
62,2 71,2
4 98 66
88,1 97,4
Investment Return 20.00% 5 05 14
118,8 128,0
6 28 94
Reversionary 155,4 164,0
Bonus 0% 7 01 90
198,9 206,3
SC Escalation 0% 8 39 24
250,7 255,8
9 68 78
312,4 314,0
10 68 19
385,9 382,2
CHARGES 1 11 17 36
Investment 473,3 462,2
Content 12 54 75
577,4 556,1
0 73% 13 42 84
701,3 666,3
1 73% 14 53 69
848,8 795,6
2 99% 15 61 48
1,024,4 947,3
PolicyFee 15 16 59 31
0.80% 1,233,4 1,125,3
FMC 17 98 01
Net Monthly 1,482,3 1,334,1
Growth 1.014632816 18 46 12
45
 46

PART : 2
OBJECTIVE OF STUDY
In the short span of time, since the insurance sector has opened up, HDFC Standard Life

Insurance has, literally, dictated the market’s evolution. Catering to all age and income

segments, the company started out with the traditional insurance policies that were easy to

understand. The idea was entice the customers used to LIC’s style of functioning.

Soon, HDFC SLIC (HDFC Standard Life Insurance Company) began exploring new areas. It

introduced new products like the market-linked products where returns are linked to the market

performance of the underlying assets.

HDFC SLIC leads in virtually all parameters:

 Size of agent force

 Number of policies sold

 Total sum assured

 Premium income, and

 Productivity of agents.

It has set exacting standards for its range of products, riders offered, quality of information in

promotional material and even in the insurance awareness events organized.

What has been in favor of HDFC SLIC is its range of products in each segment of life

insurance – traditional, unit-linked, and single-premium options, be they for retirement plans or

children plans. With such a comprehensive bouquet, it caters to all financial goals of a

customer.

So, the objective of the study is to see and analyze the bouquet of products and satisfaction of

customers to determine the “Emerging Investment Dynamics In Life Insurance Industry”

 47

IMPORTANCE OF THE STUDY

HDFC SLIC has grown exponentially over the past three years, making its mark in a number

of segments such as: retirement solutions, child plans, and market-linked plans. The success of

the business, thus far, has reaffirmed the commitment of both the partners – HDFC Bank and

Standard Life – towards achieving the company’s vision of being a leader in life insurance

business in India.

HDFC SLIC is the leading private sector life insurance company in India. In December 2003,

it crossed the Rs. 1000 crore total premium mark, the first private life insurer to do so.

So, the research work is important in respect of understanding the changing insurance sector

with special reference to HDFC SLIC. The study is about:

Products of leading private insurer

 Their mode of recruiting financial advisors (FCs), and

 Their approach – which made them customer-centric

 48

SCOPE OF STUDY

HDFC SLIC has increased its market share among private life insurers to nearly 40% from

33% as of end-December. The company’s first-year premium income in the April-March

period stood at Rs. 464.6 crore, accounting for 39.3% of the Rs. 1,364 crore premium booked

by all private life insurers together.

Considering the entire life insurance market, including the Rs. 9,780 crore booked by LIC,

HDFC SLIC’s market share works out to be around 4.17%. The life insurance market

continues to be dominated by LIC which has about 87.8% of the shares. This is only a

marginal dip from its 88.2% share in end-December. These comparisons are only for the first

year or new business premium.

The gap between HDFC SLIC and the second-in-line private insurer is vast. In fact, this status

has led some analysts to wonder if the company is not a trifle too aggressive. But other say this

has more to do with the company’s customer-centric focus, its pan-India presence, and superior

risk-management and investment strategies. HDFC SLIC is not, however,

resting on its laurels.

Company’s customer-centric approach is studied during the training period and the findings of

the research work will definitely focus on the present condition and future requirement (if any)

relating to products of the company.

 49

RESEARCH METHODOLOGY

1. UNIVERSE OF STUDY
2. THE SAMPLE
3. DESCRIPTIVE RESEARCH
4. DATA COLLECTION
5. SAMPLE DESIGN USED
6. TOOLS AND TECHNIQUES

1. UNIVERSE OF STUDY

jaipur

2. THE SAMPLE

The study is based on the data collected from some selected locations in jaipur. I have taken a

sample of 300 customers. The aim is to know the views of the people. Due to shortage of time,

the sample taken is small representing the views of all the people. Thus, for the present study,

the sample can be said to be representative of all the people of jaipur.

3. DESCRIPTIVE RESEARCH

Descriptive research studies are those studies which are concerned with describing the

characteristics of a particular individual, or of a group. In descriptive research studies, the

researcher must be able to define clearly what he wants to measure and must find adequate

method for measuring it along with a clear-cut definition of the ‘population’ he wants to study.

Since the aim is to obtain complete and accurate information, the procedure to be used must be

carefully planned. So, I have planned my research work, accordingly.

4. DATA COLLECTION

I have used the following data collection methods during my research study:
 50

 PRIMARY DATA, and

 SECONDARY DATA
PRIMARY DATA: Primary data is that data which is taken directly from the

survey method

SECONDARY DATA: Secondary data is that data which is taken from

manuals, books, journals, and business magazines, etc. It is also called second-

hand data.

5. SAMPLE DESIGN USED

Although there are many methods of sampling which can be applied in research studies, but

during the survey, I have applied two methods, which are as follows:

a) CLUSTER SAMPLING METHOD:

It is difficult and even impossible to identify uniquely each member of the population. Yet it

may be possible to identify certain sub-groups with relative cases.

The cluster is a geographical or social unit; though it may be defined by other properties.

Typical clusters are city blocks, households, family organizations, farms, etc.

Thus, for example, in a survey of city population, no up-to-date lists of the residents are

available but a map showing blocks and then sample of each block may be drawn. Count may

be taken of those who live in these blocks. Using cluster sampling for my research work, I

have divided the whole city of New

b) Delhi, from where I have started my survey, which is Connaught Place, into

clusters like first,second, third, and fourth.

 51

c) RANDOM SAMPLING METHOD:

A sampling procedure for which possible combination of two or more elements have equal

chance of being selected is called Simple Random Sampling.

In general, a simple random sampling procedure of ‘n’ elements from the population has equal

chance of being selected.

Simple random sampling has an important property related to variability of estimates obtained

from such samples which decrease as sample size increase.

During my survey, I adopted random sampling method where I have selected the customer

randomly and asked questions.

6. TOOLS AND TECHNIQUES:

As we know that collection of data is very necessary for completion of any research work, so

in my survey I have used Questionnaire method for collecting data.

SWOT ANALYSIS
STRENGTHS
The strengths are:

 HDFC SLIC is the third largest player in the insurance industry in India
 52

 It is the largest home loan financing institution in India

 Standard Life is a 100 years old company (founded in UK)

 HDFC enjoys the highest AAA credit rating, which ensures highest safety of money

 Mutual Fund

 Personal Loan

WEAKNESSES
The weaknesses are:

 Some customers are not satisfied with the service of HDFC SLIC

 Only 24 branches all over India

 High insurance-period duration

 High premium

 Low awareness of HDFC SLIC in rural areas

OPPORTUNITY
The opportunities are:

 Huge opportunity in insurance market

 Better products as compared to other industries

 Due to increase in literacy rates, literate people prefer HDFC SLIC

 HDFC SLIC gives opportunity to other businesses to grow in the market

THREATS
The threats are:

 Tough competition from LIC, ICICI, BAJAJ ALLIANCE, and BIRLA SUN LIFE
 53

 Due to low premium, rural markets prefer LIC

 Threat for HDFC SLIC because over 12 new companies are entering the market

 Currently, HDFC SLIC is the 3rd player in the market, and the major threat is to sustain

that position in the face of competition

RESEARCH FINDINGS AND ANALYSIS

SURVEY FOR AWARENESS OF LIFE INSURANCE
RESEARCH METHODOLOGY
The technique of finding facts from raw data is known as sampling.

SAMPLING:
 54

Sampling is simply the process of learning about the population on the basis of the sample

drawn for it. Under this method, small group of the universe is taken as the representative of

the whole mass and the results are drawn. It is a method to make social investigation

practicable and easy.

SAMPLE:
“A static sample is a miniature picture or cross section of an entire group or an aggregate from

which the sample is taken. A sample is the reflection of the universe.”

I have taken a total of 300 samples from the Jaipur population.

CLUSTER SAMPLING

Under this method, the total population is divided into some recognizable sub-division which

are termed as clusters and a simple random selection of these clusters is made and then the

survey of each and every unit in the selected cluster is done.

PRINCIPLE OF CLUSTER SAMPLING

The principles that are basic to cluster sampling are:

 Clusters should be drawn from a sample which is in tune with the cost and other

limitations of the survey

 The number of sampling unit in each cluster should be approximately same

Details about cluster sampling from the project:

Age No. of Samples

25-35 100

35-45 100
 55

45-55 100

55 & above 100

CONTENTS OF SURVEY

Awareness in Different Age Group

Group No. of Samples

25-35 100

35-45 100

45-55 100

55 & above 100

Purpose of Insurance

Group No. of Samples

Businessmen 100

Government employees 50

Private employees 50

Degree of Awareness in Different Gender of Society

Male 100

Female 50

FINDINGS OF AGE GROUP (25-35)

 56

11%
15% K.I.N.P.
45% T.P.
N.A.I.
U.T.
29%

Total no. of samples : 50

Area of survey Jaipur

Findings

 This age group is having the second highest number of policy holders among all age

groups

 Second highest awareness of insurance among people of this age group

Feedback from people

K.I.N.P. : Know about insurance but not taken any policy

T.P. : Taken policy

N.A.I. : Not aware of insurance

U.T. : Useless thing

FINDINGS OF AGE GROUP (35-45)

 57

11% 4%
27%
K.I.N.P.
T.P.
N.A.I.
U.T.
58%

Total no. of samples : 50

Area of survey : Jaipur

Findings

 This age group is having highest number of policy holders among all age groups

 Highest awareness of insurance among people

Feedback from people

K.I.N.P. : Know about insurance but not taken any policy

T.P. : Taken policy

N.A.I. : Not aware of insurance

U.T. : Useless thing

FINDINGS OF AGE GROUP (45-55)

2% 23%
K.I.N.P.
T.P.
11% N.A.I.
U.T.
64%
 58

Total no. of samples : 50

Area of survey : Jaipur

Findings

 This age group is having the lowest number of policy holders among all age groups

 Lowest awareness of insurance among people

Feedback from people

K.I.N.P. : Know about insurance but not taken any policy

T.P. : Taken policy

N.A.I. : Not aware of insurance

U.T. : Useless thing

FINDINGS OF AGE GROUP (55 & ABOVE)

 59

9%
19% 33% K.I.N.P.
T.P.
N.A.I.
U.T.
39%

Total no. of samples : 50

Area of survey : Jaipur

Findings

 This age group is having low number of policyholders among all age groups

 Low awareness of insurance among people

Feedback from people

K.I.N.P. : Know about insurance but not taken any policy

T.P. : Taken policy

N.A.I. : Not aware of insurance

U.T. : Useless thing

PURPOSE OF INSURANCE (BUSINESS CLASS)

 60

INVESTMENT
22% 24%
LIFE
PENSION
CHILD LIFE
17% 20% TAX SAVER
17%
Total no. of sample : 50

Area of survey : Jaipur

Findings

The major finding of this part of the research study is that business class treat insurance mainly

as a tool of Investment and Tax Savings. They spend less on Pension and Life Plans.

PURPOSE OF INSURANCE(PRIVATE EMPLOYEES)

INVESTMENT
18% 21%
LIFE
PENSION

20% 18% CHILD LIFE

23% TAX SAVER
Total no. of sample : 50

Area of survey : Jaipur

Findings
 61

The major finding of this part of the research study is that Private employees use insurance

mainly as an age old tool of Security and they spend equally on Child Life, their life and Tax

saving.

PURPOSE OF INSURANCE (GOVERNMENT EMPLOYEES)

18% 20% INVESTMENT

LIFE
PENSION
24% CHILD LIFE
22%
16% TAX SAVER
Total no. of sample : 50

Area of survey : Jaipur

Findings

The major finding of this part of the research study is that Government employees spend more

on their life and Child Life compared to other sections of the society.
 62

DEGREE OF AWARENESSAMONG DIFFERENT GENDERS OF THE

SOCIETY
MALE:

KNOW
22%
INSURANCE
45% DON'T KNOW
INSURANCE
33% CAN'T SAY
No. of sample : 50
Area of survey : Jaipur

FEMALE:
KNOW
28% 27% INSURANCE
DON'T KNOW
INSURANCE
CAN'T SAY
45%
No. of sample : 50

Area of survey : Jaipur

 63

Individual – Life
Portfolio as on 31st March, 2008

Fund Name: HDFC SL Growth Fund

Asset Allocation % of Fund

Equity Shares 100.26%

Gilt 0.00%

Treasury Bills 0.00%

Non-Government Securities 0.00%

Current Assets/ (Liabilities) -0.26%

100.00%

Industry & Equity Share % of Fund

Capital Goods 17.39%

Bharat Electronics Ltd. 3.06%

Bharat Heavy Electricals Ltd. 4.54%

Crompton Greaves Ltd. 3.35%

Larsen & Toubro Ltd. 4.27%

Thermax Ltd. 2.16%

FMCG 10.77%

Glaxo Smithkline Cons 2.48%

Hindustan Lever Ltd. 2.94%

ITC Ltd. 5.36%

 64

Transport Equipments 17.39%

Asahi India Glass Ltd. 1.94%

Maruti Udyog Ltd. 5.21%

Motor Industries Company Ltd. 2.22%

Shanthi Gears Ltd. 3.08%

Sundaram Fasteners Ltd. 2.75%

TVS Motors Co. Ltd. 2.17%

Metal, Metal Products & Mining 8.41%

Hidalco Industries Ltd. 2.83%

Hindustan Zinc Ltd. 3.98%

Sesa Goa Ltd. 1.61%

Transport Services 2.47%

Container Corporation of India Ltd. 2.47%

Oil & Gas 8.04%

Indian Oil Corporation Ltd. 1.56%

Oil & Natural Gas Corp. (ONGC) 5.24%

Reliance Industries Ltd. 1.25%

Healthcare 6.62%

Divis Laboratories Ltd. 2.99%

Glaxo Smithkline Pharma Ltd. 0.97%

P&G Hygiene & Health Care Ltd. 2.66%

 65

Information Technology 10.21%

Infosys Technologies Ltd. 3.11%

Satyam Computers Services Ltd. 3.72%

Tata Consultancy Services Ltd.

(TCS) 3.38%

Finance 4.83%

Punjab National Bank 1.46%

State Bank of India 3.37%

Chemical & Petrochemical 6.11%

Asian Paints (India) Ltd. 2.47%

SRF Ltd. 3.64%

Housing Related 5.35%

Associated Cement Co. Ltd. 2.68%

Gujrat Ambuja Cements Ltd. 2.67%

Consumer Durables 2.68%

Blue Star Limited 2.68%

 66

Individual – Life Fund Performance

Rolling Yearly Performance
90%

80%

70%

60%

50%

40%

30%

20%

10%
HDFCSL Growth Fund
BSE 100

0%
Jan'05 Mar'05 May'05 Jul'05 Sep'05 Nov'05 Jan'06 Mar'06

Comments: Our Growth Funds offers the opportunity for substantial growth in the long term.

Our performance is excellent, beating the BSE 100 over all the time periods. As expected, the

performance achieved, over a period as short as 1 year, depends on when the investment is

made. We have achieved returns varying from just under 10% p.a. for an investment made in

mid Jan’04 to a high of over 86% p.a. for an investment made in end Mar’05.

On average, we have out-performed the index by 12% p.a.

 67

Our Performance vis-à-vis Competitors

The performance analysis is to present how HDFC SL Unit Linked Funds are performing

against the Benchmark and our Competitor Funds.

We have illustrated how our unit-linked funds available to our Retail Life Business have

performed so far.

The products for which these funds are available:

I. HDFC Unit Linked Endowment Plan

II.HDFC Unit Linked Young Star Plan

We are illustrating our performance from 01-Jan-05 using charts that look like the one given

below:

Rolling Yearly Returns

25

20

15

10

5
Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Jul'05

HDFC SL Fund Return

Index Return
Competitor Return
 68

PRIVATE MARKET SHARE – RETAIL:

MARCH – JUNE, 2008

ICICI
PRUDENTIAL
MAX NYL

HDFC

BIRLA SUN
8% 4% 3%
9% 40%
BAJAJ
7% ALLIANZ
7% OM KOTAK
12% 10%
SBI LIFE

TATA AIG

OTHERS
 69

INSURANCE OPPORTUNITY:LOW PENETRATION

UK

12
JAPAN

SOUTH
KOREA

10

8 MALAYSIA

6
US

4
INDIA

CHINA

INSURANCE PREMIUM AS % OF GDP

 70

QUESTIONNAIRE

1) Do you plan for future investment? Yes/No

2) Do you save money for future? Yes/No

3) Are you aware of insurance? Yes/No

4) Are you a Taxpayer? Yes/No

5) Have you taken any insurance policy? Yes/No

if ‘Yes’, name company…………………………………………………….

6) Generally, where do you invest your savings?

Preferences Name

 In Banks
 In Insurance
 In Mutual Funds
 In Shares

7) Who made the path of investment easy for you?

Name and Contact No………………………………………………………
…………………………………………………………………………………
8) Do you think Mutual Funds together with Life Insurance, are more helpful?
Yes/No

9) Are you aware about private life insurance companies?

Yes/No
 71

PEOPLE HAVING HDFC STANDARD LIFE POLICY

 72

78%
80%
60%
40% 22%
20%
0%
Yes No

According to the survey, 22% customers have HDFC SLIC products and 78% customers do

not have HDFC SLIC products. As HDFC SLIC recently entered the insurance sector, in 4

years it has captured a big market, which is a great achievement for HDFC SLIC.

HDFC SLIC satisfies the needs and requirements of the customers and provides them better

policy as well as services.

People buy HDFC SLIC products because it gives them dual benefits. It ensures the money

that people invested in it and gives good rate of return, and secondly, it enables them to sell its

products much more effectively in a short span of time.

GRAPH SHOWING SATISFACTION WITH

 73

HDFC SLIC PREMIUM POLICY

25%
SATISFIED
NOT SATISFIED
75%
Approximately, 82% customers are satisfied with the premium policy of HDFC SLIC. It means

that bulk of the policy holders are satisfied with the premium policy of HDFC SLIC. Only a

meager percentage of 28% customers are not satisfied with the premium policy.

This does not have any negative impact on the creditworthiness of the organization.

SATISFIED WITH REGULAR SERVICE OF

HDFC STANDARD LIFE

100% 85%
80%
60%
40%
15%
20%
0%
S

D
A

IE
TI

SF
S
FI

TI
SA
E
D

T
O
N

According to the survey, 85% of the customers are satisfied with the regular service of HDFC

SLIC, and 15% customers are not satisfied. The services such as intimation for payment of due

premium in time, and about other related documents of the policies, fall under this category
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MARKET EXPANSION

There has been an overall expansion in the market. This has been possible due to increased

awareness levels, thanks to the large number of advertising campaigns launched by the players.

The scope for expansion is still unlimited as virtually all the players are concentrating on large

cities and towns, except for LIC, which made a significant effort to tap the rural market.

NEW PRODUCT OFFERING

There has been a plethora of new and innovative products offered by the new players, mainly

due to the stability of the customers of the international partners which range from a large

variety of products from pure terms (risk) insurance to unit-linked investment products.

Customers are offered unbundled products with a variety of benefits as riders, from which they

are to choose. More and more customers are buying products and services based on their true

needs and not just traditional money back policies, which are considered very appropriate for

long-term protection

and saving. However, there are still some key products to be introduced, such as, health

products.

CHANNELS OF DISTRIBUTION
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Till the last two years, the only mode of distribution of life insurance products was the

insurance agents. While agents still continue to be the predominant distribution channel, today

a number of innovative alternative channels of distribution are being offered to the customer.

Some of them are banc assurance partners, brokers, and direct marketing. The widespread

reach of bank branch network in India could lead to banc assurance emerging as a significant

distribution mechanism.
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VARIETY BASED POSITIONING

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This type of positioning is based on varieties in products and services rather than customer

segments. It is a sensible strategy in offering certain products and services. In the insurance

industry also it is possible to achieve a unique position by focusing on certain category of

products. One such example is Birla Sun Life Insurance, which has been focusing on

investment related products since its launch in India. Through its superior fund management

capabilities, the insurance company can deliver better returns on the investment related

products, and, thereby, carve a niche for itself in a leading position in this segment.

NEED BASED POSITIONING

This type of positioning is based on the different needs of different groups of customer. This

can be done successfully if a company has unique strength to offer particular service to a group

of customers to satisfy their needs better than others.

The insurance needs of customers vary significantly among different groups of customers. The

insurance needs of young families with small children will be different than the families in

which the bread winner is close to retirement. However, in India, most of the life insurance

companies have a wide variety of products tailored for different needs of the customers, and

there is no company known to focus on a particular customer need

ACCESS BASED POSITIONING

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Positioning of customer can also be done in the way by which they are accessible. Different

groups of customers may be accessible by different ways even though they may have similar

needs. Access is simply a function of customer geography or customer scale.

There is excellent opportunity in the insurance industry to employ access based positioning by

targeting the rural insurance sector. The rural market for insurance is very different than urban

market in terms of needs, income levels, and penetration of media, and so on. So far, except for

LIC, no player has paid attention or focus on the rural sector.

CHOOSING THE RIGHT STRATEGY

The right strategy is not a matter of positioning choice alone. It involves the very way the

company organizes itself to do business. It is a configuration of the entire value chain of the

organization through a different set of activities to deliver unique products and services to the

customer. The set of activities cover all upstream and downstream activities, from the selection

of the product mix, the way the products are priced, promoted, the type of distribution

mechanism used, the way customers are services, and so on.

Some life insurance companies focusing on rural market has adopted innovative means of

distribution. Instead of appointing agents as is done typically, they have used gram sevaks in

different villages across the country to promote life insurance and act as their sales arm. This

enabled them to tap the knowledge of the local people, establish the concept of the product in

their mental filter and ultimately striking a deal.

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BIBLIOGRAPHY

 PHILIP KOTLER (MARKETING)

 C.R. KOTHARI (RESEARCH METHODOLOGY)

 TIMES OF INDIA (JULY-AUGUST, 2008)

 ECONOMIC TIMES (JULY-AUGUST, 2008)

 www.hdfcinsurance.com
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GLOSSARY
Accident

The accident is defined in the policy document as follows –

“The accident must be caused by violent, external, and visible means and the cause of

injury/injuries is solely independent of any other means”.

Accident death benefit

Benefit is that which provides for the payment of an additional sum (usually equal to the sum

assured of the basic policy) in the event of death by an accident.

Amount Payable

This refers to the amount that is payable according to the terms and conditions of the insurance

policy to the legal heir. This includes payment of agreed payments at regular intervals from a

fixed date. This continues until the death of the individual, on whose life the annuity is bought.

Annuity

An investment option that makes a series of regular payments to an individual in exchange for

a premium or a series of premia.

Appreciate

To grow in value

Asset

Everything owned or due to a person

Asset allocation

How your investments are spread across various asset classes

Balanced Fund

A fund that maintains a balanced portfolio, generally, 60% bonds or preferred stocks and 40%

common stocks.
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Bear market

The period of time, in which, the money market, in general, lose money.

Benchmark

A reference point, that which is chosen for the purpose of comparing other related values.

Bond

A bond is security in the form of a convertible loan with a maturity date, where the investor

lends money to a company or government.

Bonus

The amount paid as return in a ‘with-profit’ policy. The bonus, expressed as a percentage of

the sum assured, is generally declared every year. The amount is linked to the profits earned by

the insurer. Depending on the time of withdrawal, there are two kinds of bonuses –

reversionary and cash. A reversionary bonus can be encashed only on maturity of the policy; a

cash bonus can be withdrawn when declared

Budget

It is a tool used to monitor and control expenditures and purchases.

Bull market

A good market period, when prices of securities increase greatly over a specific period of time.

Capital gains

Profit earned from the sale of stocks, mutual fund units and real estate. Long-term capital gains

arise from assets owned for more than a year while short-term capital gains are made from

assets owned for less than a year.

Claim
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Written request by an insured for the insurance company to cover an incurred loss, usually

submitted on the company’s standard form.

Compound Interest

Interest computed on principal plus interest accrued during the previous periods of the

investment

Corpus

The amount of money available with a scheme for investing. If already invested, the corpus is

the current value of the scheme’s portfolio.

Cost averaging

A strategy that involves investing a fixed amount of money in an asset class like equity, so that

the average cost of acquiring the asset in the long-term is much lower than that in the short-

term.

Cover

Another word for insurance; it also refers to the amount of insurance.

Critical illness rider

A rider that provides a policyholder financial protection in the event of a critical illness

Compounding

Earnings from an investment. Over time, compounding can produce significant growth in value

of an investment.

Date of commencement

The date on which insurance cover begins, following acceptance of the risk by the insurer.

Death benefit

The amount payable to the nominee on death of the policyholder. The amount paid is the sum

assured plus benefits applicable (if any) less outstanding loans.

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Declining term cover

A type of pure life protection insurance policy where the premia remain the same while the life

coverage keeps declining. They are typically used to cover the life of a person with a pending

loan repayment, like home loan.

Deferred annuity

An annuity plan where the first annuity payment becomes payable after a chosen period that

exceeds one year.

Discretionary expenses

These are expenses like entertainment, dining out and non-compulsory travel that you can

reduce at will.

Disability / dismemberment benefit rider

A rider that provides for additional cover in the event of disability, or dismemberment, of the

policy holder due to an accident

Dividends

Payments made by companies and mutual funds to shareholders and unit-holders, respectively,

from the income generated by it.

Down payment

The money that a home buyer has to contribute, often at least 15 per cent of the value of the

house, when he is taking a home loan.

Dividend yield

The percentage of dividend paid on a share to the value of the share.

Death benefit payable

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The amount payable, as stated in a life insurance policy, to the designated beneficiary(ies)

upon the death of the insured. The amount paid is the face value plus any riders that are

applicable, less any outstanding loans.

Depreciation

A decline in the investment value.

Emergency fund

The money, in the form of liquid investments in bank savings accounts, two-in-one accounts

and liquid funds, you need, to take care of emergencies like a job loss that your insurance

policies wouldn’t cover

Endowment plans

An insurance plan that provides a policyholder risk cover and some return on investment.

Usually suitable for the risk-averse

Effective rate of interest

The true rate as against the nominal rate, which may be incorrect.

Estate

All assets of a person, both financial-like stocks, bonds, mutual funds and fixed deposits and

physical-like a house and gold that can be passed on to his heirs.

Estate planning

A financial plan to ensure the transfer of all your assets-both financial, such as fixed deposits

and stocks and physical, such as home, after your death to your heirs without any delay or loss.

Exclusions

Risks and circumstances not covered by a policy. No claim will be entertained in case of losses

arising out of such situations

ELSS (equity-linked savings schemes)

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Diversified equity funds that additionally offer a tax deduction under Section 80C on

investments up to Rs.1 lakh.

EMI (equated monthly installment)

A borrower must make this payment each month towards repayment of interest and principal

of a loan taken by him.

Equity

The actual ownership interest in a specific asset or group of assets

Endowment

A type of insurance policy which provides for the face value stated in the contract to be

payable in a fixed date or on the life insurer’s early death.

Equity

A stock or the interest in capital gains received from the ownership of a stock.

Financial planning

It covers the essential elements of a person’s financial affairs and is aimed at achieving a

person’s financial goals.

Fixed deposit

Funds placed on deposit in a bank, company or post office at a fixed rate of interest.

Fixed-income investment

Any investment that provides a stated percentage of value, say 6 per cent, on the invested

amount.

Fixed rate loan

Interest rate charged on a loan that remains fixed during the tenure of the loan

Floating rate loan

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Interest rate charged on a loan benchmarked to a particular lending rate. The rate gets adjusted

during the tenure of the loan as the benchmark interest rate changes.

Group Insurance

An insurance policy taken out by employers to provide life cover to their employees. Usually

the cheapest form of insurance.

Guaranteed additions

The amount paid as returns in assured-return insurance plans. Guaranteed additions are

expressed as a percentage of the sum assured, with the amount payable being stated by the

insurer at the outset.

Hospital cash benefit rider

A rider that provides cover for hospitalization

Immediate annuity

An annuity that starts payments immediately after, or soon after, the first premium is paid

Index fund

A scheme whose portfolio mirrors the progress of a particular index, both in terms of

composition and individual stock weight ages. It’s a passive investment option, as a fund’s

performance will mimic the index concerned, barring a minor tracking error.

Insurance

A fund that primarily seeks current income, than growth of capital. It will tend to invest in

stocks and bonds that normally pay higher dividends and interest.

Insured

The policyholder

Investments
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Assets like fixed deposits, post office savings, bonds and stocks that are acquired for the

purpose of earning a return

Investment risks

The risks that your investments face. These include the risk of interest rate fluctuations

impacting your debt investments or the prices of equities going down.

Level term cover rider

A rider that increases the life cover in non-term plans, up to a maximum of the sum assured on

the base policy. The rider offers death benefit along, and serves the need for extra protection

for a specified time period.

Loyalty additions

Additional benefits (other than guaranteed additions/bonus) paid to policyholders on maturity

of certain investment-based insurance plans for staying on through its term. Loyalty additions

are paid as a percentage of the sum assured, with the amount depending on the insurer’s

financial performance.

Lock-in period

The period of time for which investments made in an investment option cannot be withdrawn.

Money-back plans

A variant of endowment plans in which survival benefits are disbursed through the policy term,

rather than in a lump sum at the end.

Net asset value (NAV)

The simplest measure of how a scheme is performing, it tells how much each unit of it is worth

at any point in time. A scheme’s NAV is its net assets (the market value of the financial

securities it owns minus whatever it owes) divided by the number of units it has issued.
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Nominee

The person(s) nominated by the policyholder to receive the policy benefits in the event of his

death.

Pension plan

Investment products offered by insurance companies and mutual funds that required the

investor to make defined contributions over regular periods, mostly every year. The

contributions are invested according to a pre-decided investment plan. At retirement, the

accumulation is paid out through regular pay-out options.

Policy

The legal document issued by an insurance company to a policyholder that states the terms and

conditions of an insurance contract.

Policyholder

The person who buys an insurance policy. Also referred to as the ‘insured’.

Premium

The amount paid by the insured to the insurer to buy cover

Riders

Additional covers that can be added to a life policy, for a cost

Sum assured

The amount of cover taken under a life insurance policy, it is the minimum amount that will be

paid on death of the policyholder during the policy term.

Surrender value

The amount payable by the insurer to the owner of an investment-based plan in case he opts to

terminate the policy after three years (the mandatory lock-in period) but before its maturity
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date. The surrender value will be the premia paid till date minus surrender charges and any

outstanding loans due.

Term plans

A plan that provides life cover for a specified period of time, but no return on the premia paid

Vesting date

Generally used in the context of pension plans and children’s plans offered by life insurance

companies. It is a date signifying a milestone in a policy. In pension plans, it is the date from

which the policyholder starts receiving pension. In children’s plans, it is the date from which a

child becomes the owner of a policy taken out in his name (generally, around his 18th

birthday).

Will

A document that designates the assets of a person-both financial and physical- to various

family members and other heirs.

Whole-life plan

Class of life insurance policies that provide cover through your lifetime.